Critics argue that taxing unrealised gains is impractical, particularly for assets with limited liquidity. Geoff Wilson acknowledged Brian McNamee's courage in opposing the tax, which sets a precedent for others to follow. A significant concern is that the vast power held by industry and union funds may be silencing potential dissent.
According to a discussion paper released by Wilson Asset Management, the proposed tax could have detrimental economic consequences, with potential losses estimated at $100 billion. The paper suggests that policymakers should seek alternative revenue strategies to promote equitable and sustainable economic growth, rather than pursuing a tax that could harm investment.
The proposed tax could inadvertently encourage investors to reduce their superannuation balances below the threshold to avoid taxation. Wilson pointed out that this behavioural shift might prevent the government from achieving its projected revenue goals, thereby undermining the tax's efficacy.
Jamie Green, executive chairman of PrimaryMarkets, echoed these concerns, describing the proposal as a "Trojan horse" poised to normalise the taxation of hypothetical profits. Green argued that the tax might enforce short-term investment strategies, disrupting long-term portfolio development.
The sentiment among some industry experts is that this approach could disincentivise large-scale investments and generosity towards Australia's economic future, potentially driving substantial funds out of self-managed super funds (SMSFs) and into housing or inheritance.
The Parliamentary Budget Office projects that the tax would generate nearly $7 billion annually within a decade, but the behavioural changes anticipated by critics could render this forecast unrealistic. Mary Delahunty of the Association of Superannuation Funds of Australia (ASFA) believes the concerns are overstated, comparing it to land tax—another tax on unrealised gains.
ASFA has supported the intentions behind the $3 million cap on super balances, even as they acknowledge the policy's current form is imperfect. Delahunty suggested that adjustments, such as deferring immediate tax payments, could improve equity in superannuation tax incentives.
