Australian Conservatives’ leader Cory Bernardi says Labor’s double taxation plan is a “dud”.
The Australian newspaper’s Janet Albrechtsen agrees, writing today:
Rarely can a political party have so cynically exploited class envy and ignorance with such draconian consequences for the victims as the ALP with its proposed ban on cash refunds of franking credits. The ALP has effectively said it will raise $59 billion over 10 years by partially reimposing the old system of double taxation of company profits paid to self-funded retirees. It has effectively said to these people: “You don’t vote for us, and anyway this is a complex area of tax law the average voter doesn’t understand, so we feel safe in expropriating your income.”
The consequences are huge. There will be numerous retirees forced on to the pension — an own goal for a political party trying to get back to surplus. Many self-funded retirees will sell their Australian share portfolios and put the money into real estate. It’s quite possible there will be a new property boom, with disastrous consequences for housing affordability. Young home buyers will now compete at auctions with self-funded retirees displaced from the equity markets.
And what will companies do now that the value of their franking credits has been so dramatically reduced? Certainly the incentive to pay tax has been significantly cut. But the bigger problem is the increased cost of equity. Shares will lose value and Australian companies will find it harder to raise funds. Labor has shown itself not to understand how the economy or the tax system works.
The ALP has long disliked those who have worked hard for decades and been sufficiently successful to fund their own retirements. It sees them as rich milch cows. This is the final act of slaughter.
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