Australian Financial Review
Shadow treasurer Chris Bowen said retirees unhappy with Labor’s plan to scrap cash payments for excess franking credits were free to take their vote elsewhere because the Opposition would not be backing down.
As the government builds pressure on Labor over the policy which could see up to 900,000 self-funded retiress lose income, Mr Bowen said the system in which people who pay no or little tax but receive a tax refund was neither fair nor sustainable.
Speaking on the ABC on Wednesday, Mr Bowen, in response to a complaint from a listener that he would be $5000 a year worse off, Mr Bowen was unapologetic.
“I say to your listeners, if they feel very strongly about this, if they feel that this is something which should impact on their vote, they are of course perfectly entitled to vote against us,” he said.
Mr Bowen was similarly defiant over Labor’s plans to limit future negative gearing to new properties only. Unlike the franking credits policy, all existing investors who use negative gearing would be exempted. Mr Bowen said the start date for the negative gearing changes would be announced “well before” the election.
“What we’re doing is reforming unsustainable, unfair concessions and loopholes in the system. We make no apology for that, it’s the right policy,” Mr Bowen said.
“It’s necessary to invest more in schools and hospitals, to deliver bigger personal income tax cuts (than the government).”
“We make all those commitments and we provide bigger budget surpluses.”
The negative gearing changes were announced before the last election and the franking credits changes were announced a year ago.
Mr Bowen said unlike the Abbott government which tried to introduce a Medicare co-payment and increase other taxes only after it was elected in 2013, Labor had been courageous and up front enough to detail its plans well before the election.
“We’ve gad the courage to tell them our plan,” he said.
“We are saying negative gearing is unfair to first homebuyers and is a big cost to the budget.
“We are saying that having negative income tax, refunds to people who haven’t paid any income tax and being the only country in the world that does it and spend roughly about as much on that as we do on public schools is not sustainable, is not fair, it’s got to give.”
The franking credits changes will save $11 billion in its first two years and $55.7 billion over a decade.
Article appeared in The Australian Financial Review on 30 January 2019.
Article written by Phillip Coorey.