Tax expenditures and measuring the long term costs and benefits of retirement incomes policy

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Colin Brown
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Conference Paper 93/1

This paper discusses the tax expenditures concept, the issues involved in measuring the long term costs and benefits of a retirement income policy and the concepts that the Retirement Income Modelling Task Force (RIM) will need to keep in mind in modelling the long term impacts of retirement income policies.

The paper reviews the concept of tax expenditures for retirement income policy and the criticisms of the estimates contained in the annual Tax Expenditures Statement published by the Treasury. The paper seeks to clarify the relevance of the annual tax expenditures estimates as a measure of the annual fiscal impact of the superannuation tax concessions, before going on to develop a measure of the long term costs and benefits of retirement income policy.

The paper then tests the sensitivity of this long term measure to certain key parameters influencing the cost of retirement income policy.