Labor franking credit grab ignores the party’s principles

Labor franking credit grab ignores the party’s principles, by Robert Gottliebsen.

Opposition leader Bill Shorten has handed Prime Minister Scott Morrison a present to help him overcome the Victorian state election debacle. It’s a new ALP taxation precedent whereby individual members of select organisations, often ALP-friendly, receive lower individual tax imposts than the rest of the community. …

All retired people whose savings are in pension mode and/or their assets and income are regarded as low, pay little or no tax. That means if they invest in large listed companies like BHP they receive their franking credits in cash rather than income offsets. And those cash payments currently extend to anyone with franked dividends and no other taxable income

Bill Shorten has declared that if he is elected those cash franking credits will no longer be paid. … But this tax has an exit clause. If retired people pool their savings with workers in large superannuation funds (led by industry funds) then the tax paid by the workers can be used to deliver those cash franking credits.

But where retired people’s savings are not pooled into funds that have lots of current employees, then those retirees will find the income on their savings is reduced by the removal of franking credits.

Imagine if Bill Shorten told the great Ben Chifley that retired people with the same assets and income should be taxed at different rates and those receiving lower tax rate received that tax rate by joining organisations that allowed them to sponge on workers with income. …

Ben Chifley would tell Bill very firmly that tax rate should not be about those with whom you associate, with but rather that people with the same financial position and the same sources of revenue should be taxed in the same way.

There are 1.4 million battlers who have not pooled go their money with ALP mates who will be hit hard.