The tax discussion paper, titled Re:think: Better tax system, better Australia, was released yesterday by Treasurer Joe Hockey.
Re:think initiates a consultation process that will result in a green 'options' paper and an eventual white paper that the government will take to the next election.
The paper points out that the flat rate of taxation for superannuation contributions and earnings means the level of 'concessionality' differs depending on an individual's marginal tax rate.
"Those with high incomes receive the greatest tax discount relative to their marginal tax rates, and will generally save a higher proportion of their income," the paper said.
The different rates of tax on earnings in the pre- and post-retirement phases also give rise to tax planning opportunities that are "usually more accessible to high-income earners", said the paper.
"The flat rate of tax on superannuation contributions means that most high-income people receive a larger tax concession, relative to their marginal tax rate, than low-income people," it said.
"The same is true during the accumulation phase and even more so during the retirement phase when there is no tax on earnings."
The superannuation industry's response to the tax discussion paper acknowledged that the equity of the system needs to be reviewed.
Industry Super Australia called for "fairer and more efficient" tax settings in superannuation, noting that the current settings are "neither efficient or sustainable".
"As pressure on the pension grows, super can do a lot more heavy lifting, but only if some of the existing inequities and inefficiencies are addressed," said the ISA.
Association of Superannuation Funds of Australia chief executive Pauline Vamos said the tax discussion paper provides "sound principles and a strong process" to hold a public debate about super.
Ms Vamos maintained that the compulsory nature of superannuation meant tax concessions should remain in place.
"However, ASFA has long acknowledged that a review of the tax concessions in superannuation, particularly for those with large balances, is needed so that they can be better targeted to those who most need the concessions to achieve a comfortable retirement, while minimising the draw on the age pension," Ms Vamos said.
Financial Services Council chief executive Sally Loane said her members "fully support broad and sensible tax reform".
"The tax review must be thorough, considered and everything should be on the table. It is no longer viable to rely so heavily on personal and corporate income tax to foot the bill for public services," Ms Loane said.
"Issues that are being fiercely contested in the public arena right now, such as the family home, tax treatment of superannuation, the pension assets and income tests, personal and company tax rates, the GST and capital gains, all should be considered in the review," she said.
