WAYNE Swan has endorsed making those on higher incomes pay a higher rate of tax on superannuation contributions as part of the Government's response to the Henry review of taxation, recommendations of which would be implemented over a decade.
The Treasurer suggested yesterday that a sliding tax scale would be applied to super contributions.
Citing fairness as a priority, Mr Swan said the current 15 per cent flat tax on superannuation contributions meant the value of the concession on contributions increased as the person earned more.
Mr Swan said this worked against the progressive personal income tax scale, which he considered fair. For example, he considered it fair that a person who earns $150,000 has 2½ times the income of somebody on $60,000 but pays almost four times the amount of tax.
"It's important that we maintain incentives for Australians to save for their retirement through super," he said.
"But I know that some have asked the [Henry] review whether aspects of the current taxation of superannuation contributions work against our progressive personal tax scale."
The Government commissioned the Treasury Secretary, Ken Henry, to conduct the so-called root-and-branch review when it came into office. The draft has been completed and a final report will be handed to Mr Swan next month. The Government will make it public early next year, before the federal election.
But Mr Swan played down the prospect of radical tax reform as part of the Government's election agenda next year. The reforms would be so comprehensive that they would take 10 years to implement.
The more controversial changes would require an electoral mandate, he said.
"I expect the report will provide a 10-year plan for reform, with recommendations that are evidence-based, and built on sound, best-practice tax policy," Mr Swan said, though there may be "some things that we can do immediately".
Most changes would also require "extensive community consultation".
"We'll foster this debate over the coming years. But we won't be pursuing these reforms until the community is ready."
He reiterated that tax returns needed to be simplified and he would be "especially attentive" to recommendations concerning this. It was "astounding" that 70 per cent of taxpayers had to pay an accountant to do their tax. People should be able to complete their returns "with just a few clicks of a mouse".
Mr Swan also confirmed the Government's wish to improve Australia's desirability as an investment location, especially in the resources sector, by cutting company taxes.
He said reform would be as least as difficult as tackling the global financial crisis. There would be difficult choices and trade-offs.
Taxes such as stamp duties were inefficient, but abolishing them meant another source of revenue for the states and territories would have to be found.
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