Conference presentation
Pulling the plug: How Australia’s superannuation tax concessions are not a public good and are draining tax revenue
USC Research Conference, 2014 (Sunshine Coast, Australia, 14-Jul-2014–18-Jul-2014)
University of the Sunshine Coast
2014
Abstract
One of the key objectives of any retirement system (in Australia, termed superannuation) is to ensure the efficient and effective transformation of retirement savings into retirement income. Australia's policy of mandated superannuation contributions (a legislated percentage of wages and salary) was formulated in response to a low level of private saving, government concern over the existing economic environment and anticipation of an ageing population that was to demand greater pension support than fiscal capacity could deliver. Since its inception in 1992, the mandated Superannuation Guarantee Charge (SGC) has been accompanied by a range of tax incentives to save for retirement. While the SGC is admirable in forcing/mandating behavioural change with people saving for retirement; concerns surround the 'tax concessions' with the superannuation system and whether they are delivering value for money. The Australian Treasury estimated the cost of such concessions to have exceeded $24 billion in fiscal 2012. In this paper we explore whether the taxation incentives provided to superannuation contributors in Australia are a form of public good. Economists typically think of public goods as representing non-excludable and non-rivalrous consumption. Public goods can be considered as providing a 'net benefit' accruing to the community arising from government expenditure. Following the extant literature in the field, we frame our discussion regarding superannuation tax concessions around the received cost-benefit approach to decision-making, based upon three key criteria. The criteria comprise: the cost of the expenditure (including the valuation or discount rate to apply); the benefit the expenditure creates; and the spillover effect of any structural externalities that may arise. These three criteria provide the means to link the economic aspects of a public good to its social welfare consequences.
Details
- Title
- Pulling the plug: How Australia’s superannuation tax concessions are not a public good and are draining tax revenue
- Authors
- Gabrielle Parle (Author) - University of the Sunshine Coast - Faculty of Arts and Business
- Conference details
- USC Research Conference, 2014 (Sunshine Coast, Australia, 14-Jul-2014–18-Jul-2014)
- Publisher
- University of the Sunshine Coast
- Date published
- 2014
- Copyright note
- Copyright © 2014 The Author.
- Organisation Unit
- University of the Sunshine Coast, Queensland; USC Business School - Legacy
- Language
- English
- Record Identifier
- 99448974902621
- Output Type
- Conference presentation
- Research Statement
- false
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