Tax breaks for wealthy costing budget billions, and rising
NEW government figures reveal superannuation and housing tax breaks for the wealthy are costing the budget 10 times as much as leaving the GST off fresh food.
The Australia Institute executive director Dr Richard Denniss said the Treasury statement also showed the cost of tax concessions for superannuation was set to double over the next four years.
"The Abbott government says it will do anything to repair the budget bottom line, but their definition of anything does not extend to closing the loopholes which are draining tens of billions of dollars from the budget each year," Dr Denniss said.
According to Treasury's Tax Expenditure Statement, the cost of the concessional tax treatment of superannuation fund earnings will blow out from $13.4 billion in 2014-15 to $25.8 billion 2017-18.
The total cost of all of the different tax concessions for superannuation is forecast to hit $45 billion by 2017.
Treasury also forecast the cost of the Howard government decision to tax income from capital gains at half the rate of other forms of income would surge from $5.8 billion to $7.6 billion over the same period.
The vast majority of the benefits of these concessions go to the wealthiest 20% of households, Dr Denniss said.
"The major cause of the Commonwealth budget deficit is the rapid reduction in the amount of revenue that is being collected," he said.
"According to the OECD, the IMF, the World Bank and our own Commonwealth Treasury, the level of tax being collected in Australia is not just low by international standards; it is low by historical standards."
Calculations by the Australia Institute showed the Abbott Government would collect an extra $34.8 billion per year if they reverted to a Howard era tax-to-GDP ratio.
"If Joe Hockey was serious about getting the budget back into surplus he would be cracking down on the loopholes and rorts that allow multi- millionaires and some big foreign companies to pay zero tax in Australia," Dr Denniss said.