The Australian government’s new superannuation tax, set to come into effect in July 2025, has ignited a firestorm of criticism after it was revealed that politicians and certain high-ranking officials will be exempt from the measure. Experts are warning that the tax could essentially be a “double-tax” on inheritance and could ultimately harm property ownership, making Australia a nation of renters rather than owners.

The new policy, introduced by the Australian Labor Party, will impose a 15% tax on earnings from superannuation balances exceeding $3 million, effectively doubling the tax rate on those balances to 30%. The tax applies to both realised and unrealised gains, meaning that even paper profits, not yet sold or realised in cash, will be taxed. Critics argue that this could force Australians to sell assets they haven’t profited from yet, simply to cover the tax liability.

Unrealised gains are a key sticking point in the new measure. For example, if someone’s superannuation fund invests in shares that increase in value but aren’t sold, those unrealised gains will still be taxed, even though no actual profit has been made. Experts warn that this could push Australians to sell investments, including homes, to cover the taxes, reducing the nation’s number of property owners and increasing the divide between an elite class of owners and a growing number of renters.

Adding fuel to the fire is the revelation that politicians and select high-ranking state and federal officials will be exempt from the tax. Those exempted include governors, government ministers, judges, police commissioners, and various senior staff members. This has sparked accusations of blatant hypocrisy, with critics accusing the government of imposing burdens on ordinary Australians while shielding the political class.

The new tax will not be indexed to inflation, which means that as time passes, more Australians could be caught by the $3 million threshold. The Centre for Independent Studies warns that this lack of indexation could result in a “bracket creep,” eventually affecting even middle-income Australians. Some Members of Parliament are already pushing for the $3 million threshold to be indexed to inflation, but with the legislation set to pass, many are concerned that the tax will have a lasting impact on future generations.

According to Treasurer Jim Chalmers, the new superannuation tax is a key part of the government’s revenue-raising strategy for its second term, intended to support public services. However, critics argue that the tax will disproportionately affect young Australians, who stand to inherit wealth from the Baby Boomer generation, currently estimated to total $3.5 trillion.

In addition to the criticism at home, the tax has drawn international attention. Frank Chung, senior reporter for News.com.au, noted that Norway’s similar tax on unrealised gains has led to a mass exodus of the wealthy from the country. In 2023, Norway raised its wealth tax, which also includes unrealised gains, leading many ultra-wealthy individuals to relocate to Switzerland. Chung warns that Australia could face similar outcomes, with wealthy Australians fleeing the country to avoid the new tax.

The new policy has caused panic among investors, many of whom are already selling off assets in anticipation of the tax. With critics fearing that the tax could push Australians out of property ownership, the public debate is intensifying.

Despite the outcry, the tax is expected to pass with support from the Greens, who are even pushing for a lower threshold. If the policy does not result in a mass exodus of wealth, it could lead to fewer Australians owning property and an increase in the concentration of wealth within a select elite class.

When they said, ‘You will own nothing and be happy,’ how did you think they were going to get us there?