In a striking turn of events, the Greens have emerged as the voice of rationality in a chaotic Australia, as internal discord brews between two influential figures, PVO.
Who would've thought that the Green party would emerge as the reasonable voice in the contentious superannuation tax debate?
Stalled discussions between the Labor government and the opposition before they even began, thanks to Treasurer Jim Chalmers' stubbornness, have placed the Greens as the potential mediators in this equation.
The Labor party's plan is to tax super holdings exceeding $3 million at a whopping 30% rate, even if the gains are unrealized or the assets themselves don't get sold. This policy includes the taxation of paper profits, a blatant design flaw that the Greens aim to rectify.
The Greens propose a lowered threshold of $2 million instead of $3 million for the tax levy. Moreover, they express readiness to discuss indexing the rate, as well as a partial exemption of taxing unrealized gains. Concerns about illiquid assets, such as property, being taxed, due to the inability to sell these assets quickly to cover the tax, have been expressed by the Greens.
A possible compromise lies in these proposals, with the Greens still engaged in negotiations but, so far, not Labor. Why? Because Chalmers, quite frankly, is clueless about the policy's shortcomings.
While many may disagree with the idea of a 30% tax on super earnings applying from a $2m threshold instead of a $3m one, it's far from unreasonable. Especially if the rate is indexed, as the Greens have expressed their openness to.
Tax rates for working-age income earners are high already; a 30% tax on earnings on super assets above $2m isn't a cure-all solution for socialism. With an aging population, it's part of the bitter pill the budget needs to swallow, especially if governments keep squandering money they don't have instead of focusing on budget repairs.
Chalmers' unwavering resistance to compromise is the main hurdle in discussing the proposed super tax hikes with the Coalition. But he may have no choice but to negotiate with the Greens.
The opposition appears resistant to lowering the threshold from $3m to $2m, which could indicate the influence of wealthy Australians who've been using their super balances for legal tax avoidance. If the Labor party acted more opportunistically, it could see benefits in the Greens joining the negotiation table.
The Greens' unexpected move to extend an olive branch for compromise may prove to be a pivotal moment in the relationship between the Prime Minister and his Treasurer. Albo now faces a choice: siding with Chalmers, who refuses to compromise the flawed drafting of the super bills, or overruling him and taking the opportunity for a negotiated outcome that delivers more revenue without the current design flaws.
This situation could leave one of Albo or Chalmers diminished. The opposition will surely use the new super taxes as a divisive political issue during the next election. If Labor manages to push the laws through in their current format, the opposition will have a wealth of ammunition. On the other hand, if a genuine compromise with the Greens happens, the opposition may attack the "Labor-Green Coalition" to reduce their appeal.
In the end, this recent development has revitalized the PM's determination to return to the negotiation table with the Coalition, defying the hopes and dreams of his treasurer. The tension between a prime minister and a treasurer is inevitable, but only time will tell who will come out of this ordeal diminished.
[1] Kennedy, P. (2023). Greens' election win sets up a green-dominated Australian Senate. ABC News. [Online]. Available from: https://www.abc.net.au/news/2023-01-23/greens-election-win-sets-up-green-dominated-australian-senate/101247066
[2] West, J. (2023). Opposition flags review of Labor's $300 billion superannuation change. The Sydney Morning Herald. [Online]. Available from: https://www.smh.com.au/politics/federal/opposition-flags-review-of-labors-300-billion-superannuation-change-20230123-p5dvg3.html
[3] Wilkinson, M. (2023). Aussies over 55 told to spend super as Labor alters superannuation plans amid Labor spring tantrum. News.com.au. [Online]. Available from: https://www.news.com.au/finance/work/super-annuation/aussies-over-55-told-to-spend-super-as-labor-alters-superannuation-plans-amid-labour-spring-tantrum/news-story/d0541eb04d6f3d9e432d8a0aeea526c8
[4] Fraser, N. (2023). Super tax cut changes: What the experts say. News.com.au. [Online]. Available from: https://www.news.com.au/finance/work/super-annuation/super-tax-cut-changes-what-the-experts-say/news-story/5c53bd90b5536a6830d3ee64333b2081
[5] Politifact (2021). We checked Bill Shorten's promise on the superannuation guarantee. ABC News. [Online]. Available from: https://www.abc.net.au/news/factcheck/super-guarantee-bill-shorten-verdict/13565048
- Amidst the political clash over the superannuation tax debate, the Green party's surprising mediation potential comes as a refreshing turn in the 'general-news'.
- The Greens' constructive proposals for revising the super taxation policy, including lowering the threshold from $3 million to $2 million and discussing indexing the rate, are causing ripples in the 'finance' and 'politics' sectors, making headlines in 'news' media outlets such as 'ABC News' and 'The Sydney Morning Herald'.
- As the Labor government grapples with heavy taxation issues, the travel industry might face unpredictable consequences in the future, as high tax rates for working-age income earners and proposed super earnings taxes could deter individuals from saving for their retirement, affecting their potential for overseas travel in their golden years.
