Workers in New South Wales would be hit with an extra $1.3 billion in tax a year if the proposal to allow workers earning less than $50,000 could opt out of superannuation, according to Industry Super Australia (ISA).
ISA said the proposal by backbench Coalition members of parliament would affect over 1.3 million people with the average NSW worker earning less than $50,000 hit with a tax bill of over $1,000 a year.
ISA chief executive, Bernie Dean, said opt-out super was a “blatant tax grab” to prop up the government’s budget bottom line at the expense of NSW workers retirement savings.
“It’s bad for the economy and bad for NSW. Local NSW MPs need to call out this proposal for what it is or explain to their constituents why they support them paying more tax for no gain,” he said.
ISA noted that workers in federal electorates of Sydney, North Sydney, Grayndler, and Kingsford Smith be lumped with the largest tax bill.
“The numbers show the opt-out super policy props up the government’s bottom line at the expense of working Australians’ retirement. But even the government’s windfall would be short lived,” ISA said.
“The superannuation savings raid would force 4.3 million Australian – 1.3 million from NSW – to go onto or take more from the aged pension, a cost everyone would soon have to pay through higher taxes.”
ISA gave an example of a 30-year-old working mother earning $50,000, who took time out to raise children, would lose almost $300,000 from her super at retirement and would pay over $61,000 extra in tax.
A 30-year-old man on $50,000, with a continuous career, would lose $533,000 from their retirement savings and would pay over $113,000 in extra tax over his working life.