The battle between the Labor and Liberal parties over franking credits is heating up.
Labor announced its policy of stopping most refunds of excess franking credits in March 2018, but the fight over it has escalated in the first few weeks of this election year.
Speaking on ABC radio, Shadow Treasurer Chris Bowen said that people who feel strongly that the franking credit rules shouldn’t be changed are “perfectly entitled to vote against us”.
The Liberal Party has jumped on this, including with a new ad:
Treasurer Josh Frydenberg said that Mr Bowen had “offended over one million Australians, dismissing their real and deep concerns, about Labor’s retiree’s tax, and arrogantly telling them, to vote against Labor”, using the Government’s term for Labor’s franking credit policy.
“These people have done nothing wrong. They’ve simply saved for their retirement. And their retirement savings should be protected, not raided.”
When the Treasurer Josh Frydenberg was asked if the election would be won and lost on taxation he said it would be “fought on the economy”.
This is, apparently, something that Labor welcomes – Chris Bowen told ABC radio that the party relishes an economic debate.
“I mean we relish it. Bill Shorten relishes it. I relish it,” he said in the interview.
“We have committed to remove excess franking credits that is negative income tax. We’re the only country in the world that does it and we spent a lot of money on it. We spend roughly the same amount on this as we do on public schools at the Commonwealth level and it’s unsustainable. It’s getting more expensive,’ Mr Bowen said in the interview.
He went on to defend the potential differing impact of the policy on SMSFs versus larger industry and retail funds – because they pay tax, and so will still receive the benefit of franking credits, unlike SMSFs fully in pension phase.
A House of Representatives Committee is currently undertaking an inquiry into refundable franking credits. Chris Bowen criticised the inquiry when it was established, saying it was unprecedented to have such an inquiry into an opposition policy.
Recently the Committee has been holding public hearings in Queensland – a state which will be key in the upcoming Federal Election. These hearings consist largely of three minute statements from members of the public.
At one of the public hearings in Brisbane retirees called for the policy to be dropped, or at least for them to be exempted through grandfathering or a similar transition period.