It was supposed to be an independent House of Representatives inquiry in a particular aspect of the tax system. Instead it had all the hallmarks of a political rally.
Jon Gaul president of the Liberal Party Merimbula-Eden branch, spruiked for Eden-Monaro Liberal candidate Fiona Kotvojs while making his three-minute presentation. Chair of this independent committee and Liberal MP Tim Wilson was happy to give the thumbs up for a photo with a placard-carrying Mr Gaul.
If this is an independent committee then no wonder there is disillusionment about our political system. Mr Wilson has already been under fire for using the inquiry to gather momentum for the Liberal cause and Labor MPs have this week been calling for his removal.
Dividend imputation (franking credits) was introduced by Labor in 1987 to eradicate double taxation. It entitles a shareholder to a tax credit on a dividend which is equivalent to the tax already paid by a company.
The Howard government made the system more generous in 2000 so that if a shareholder had an imputation credit higher than their personal tax liability, the investor would receive the excess credit as a cash refund. So in the case of a dividend from a company paying tax at 30 per cent, a shareholder taxed at 15 per cent receives a tax credit for the 15 per cent tax and cash back for the remaining 15 per cent.
Labor wants to bring the system back in line with the 1987 design.
It’s difficult to find sympathy for those angry they could stand to lose rebates worth thousands of dollars. One “case study” being used to highlight the inequity of Labor’s policy has self-funded retiree “Jean” standing to lose a $12,775 tax rebate. That is based on her $29,810 in dividends from bank shares and $130,000 from other assets.
Fair play to Jean for investing so much into the Australian economy during her working life. And if you feel government policy could lessen your income, that is entirely understandable
But her resulting earnings of $159,810 is more than double what this journalist makes with little prospect of saving or investing into such a comfortable nest egg given current cost of living expenses.
Self-funded retirees say they will be forced on to the pension; the question is whether the country will be better or worse off if they are. While the politics continue it is a little difficult to find the real truth.