Changes in the Taxation of Superannuation:Macroeconomic and Welfare Effects

Abstract

This paper provides an applied general equilibrium analysis of several alternative taxation regimes applying to superannuation. It is motivated by the decision, announced by the Australian Government in its 2006 Budget, to exempt from tax all superannuation benefits received by recipients over 60 years of age. The analysis focuses on the implications of this and other superannuation tax regimes for intergenerational equity, national living standards, labour supply, saving and social welfare. The method of analysis is simulation of an open economy overlapping generations CGE model, calibrated to Australia. Acknowledgements The authors wish to thank the Australian Research Council for financial support for this work; and the Productivity Commission for providing data on age-specific government spending.