Jim Chalmers gains cover for the unrealised capital gains tax that everyone’s against

Treasurer Jim Chalmers. Picture: Tertius Pickard

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The new target in the politics of envy is making a gain on an investment without selling it.

It’s called unrealised gains tax and Jim Chalmers wants to introduce it in July.

Forget about thresholds, indexation and the types of accounts to which such a tax might end up being introduced; it’s the fact that such a compulsory tax will be introduced at all that matters.

Unfortunately there is an intellectual dishonesty circulating that provides the Treasurer with cover to introduce such a tax into the superannuation system. Some publications have claimed that newspapers have started a campaign against increasing tax rates on superannuation earnings, contributions and realised capital gains. This is false. What has been reported studiously is the concern over an unrealised capital gains tax. A growing number of critics have said they think it’s fair to adjust the tax rates on earnings, contributions and capital gains, but taxing unrealised capital gains is the wrong way to go.

Commentators who try to pretend there is no difference between taxing unrealised capital gains and changing tax rates on contributions, earnings and actual realised capital gains are engaging in intellectual dishonesty. They are conflating two very different things.

The author of the Henry tax review, Ken Henry recommended a way taxes on super contributions could be more equitable by introducing a progressive system that provided rebates on marginal tax rates of those who make contributions to super. But he is against unrealised capital gains.

Former Reserve Bank governor Philip Lowe thinks tax rates on super earnings and contributions are too generous and could be lifted but is against unrealised capital gains.

Even the most avid opponent of unrealised capital gains, Geoff Wilson, concedes that higher taxes on contributions, earnings and capital gains would be fine as a trade-off for not introducing unrealised capital gains tax. Why has this distinction not been highlighted? Part of it is because some people want others to think those against unrealised capital gains are against more equitable taxation of superannuation. Some say it’s too hard to implement more equitable taxes on earnings of super funds because they are taxed at the fund level, not individuals.

Treasury secretary Steven Kennedy, the prospective secretary of the Department of Prime Minister and Cabinet, said on Wednesday: “We advised the government around the appropriate way to implement that policy because it is a complex system, particularly moving across APRA regulated funds and self managed super funds.”

But is that a poor excuse for introducing unrealised gains tax to help government coffers?

Alexis George, chief executive of AMP, which manages $55.8bn in retirement savings, thinks so. She has called for Chalmers to drop unrealised gains tax, but still wants changes to concessional super tax benefits to make the system fairer.

It’s another case of Treasury and industry super funds being behind the pace. And the cost? The introduction of compulsory unrealised capital gains.

It’s no secret there are current federal Labor politicians quietly against this tax.

Labor luminaries including Paul Keating and Bill Kelty, former superannuation association boss and trade unionist Michael Easson and the pioneer of renewable energy infrastructure in Australia Mike Fitzpatrick are apparently engaging in “confected outrage” just for thinking that unrealised capital gains is wrong.

The bosses of the biggest employers in the country, CSL chairman Brian McNamee and Wesfarmers chief executive Rob Scott, are against unrealised capital gains.

Will they have enough power to stop it?