Assistant Treasurer Stuart Robert says Labor’s policy to stop refunding franking credits for many taxpayers is unfair.
Speaking at the Fairer Retirement Summit – put on by the Alliance for a Fairer Retirement System, which is opposed to Labor’s policy – Robert said that it is not fair that people on lower incomes lose refunded franking credits while those on higher incomes will still be able to offset credits against their income.
“Labor thinks it is going after the top end of SMSF. Those on higher incomes can absorb franking credits against their tax liabilities,” he said in his speech.
“It is not fair.”
“You know that and I know that – the 900,000 Australians who face losing their refunded franking credits know that.”
“The critical point is that more than 45 per cent of the 900,000 people are 65 years or older. Any changes will overwhelmingly hit low and middle-income earners, with 84 per cent of the individuals impacted on taxable incomes of less than $37,000.”
“96% of the individuals impacted by Labor’s retiree tax have taxable income of less than $87,000.”
Labor Shadow Treasurer Chris Bowen has said it is “fundamentally dishonest” to use taxable income figures in debating franking credits – as the credits reduce taxable incomes.
Shortly after Labor announced its original franking credits policy it was tweaked to exclude Age Pensioners and some SMSFs – a move Labor called its ‘Pensioner Guarantee’.
Robert, in his speech, said: “Despite their backflip, Labor are still reaching into the pockets of around 900,000 Australians, including low-income earners and self-funded retirees, who will miss out on refunds of their own tax.”
“Labor’s ‘pensioner guarantee’ does nothing to protect pensioners who benefit from franking credit refunds to their SMSFs who first receive the Age Pension after 27 March 2018. APRA regulated super funds will well be able to wash these changes through their large superannuant bases, but individuals and SMSFs will not.”
“Labor’s retiree tax favours millionaires, as they are allowed to retain access to the full benefit of their franking credits. It’s those with lower incomes who miss out.”
The Alliance for a Fairer Retirement System said: “The Summit emphasised that Labor’s proposal to deny people their full tax refund would reduce the adequacy of incomes in retirement, would be unfair in terms of taxing different individuals on the same income at different rates, increased the uncertainty surrounding retirement incomes, and was a threat to the sustainability of the retirement income system by encouraging self-funded retirees to throw in the towel and move to the age pension.”
Petition against franking credit policy has over 25,000 signatures
Geoff Wilson, Chairman of Wilson Asset Management, also spoke at the Summit. Mr Wilson has been running a petition calling on the Coalition and Labor to “guarantee no change to the current dividend imputation system”. He recently wrote in the Australian Financial Review that the petition has so far received over 25,000 signatures.
He also wrote in the opinion piece that the current imputation credit system “works”, and has “significantly benefited” the Australian financial system – to the extent that he says it is a reason that Australia hasn’t had a recession in 26 years.
“The removal or adjustment of dividend imputation would be enormously detrimental to the Australian financial system. If Labor is not stopped, it would continue to erode the current system to the detriment of all Australians,” he wrote in the AFR.
In response to the opinion piece, Chris Bowen wrote that Mr Wilson is “entitled to set up a partisan campaign with the Liberal Party if he wants to: that is clearly what he is doing”.
“And the campaign is getting shriller and more ridiculous as the next election approaches.”
In late September Mr Wilson wrote, also in the AFR, that Labor would “crack” if the petition got 50,000 to 100,000 signatures.
Mr Bowen said this was a “pretty arrogant claim”, as Labor had announced its policies “early and proudly” and campaigned for them in recent by-elections.
“Anybody who makes a claim that Labor will “crack” has significantly underestimated Labor’s resolve to improve the sustainability of the budget and fairness of the tax system.”
“Half the Labor front bench has been signed up to Mr Wilson’s petition without our knowledge, which makes the claim a little more laughable.”