What do you do when a parliamentary inquiry’s findings rubbish one of your party’s signature policy plans?
Disparage the inquiry as a farce, of course.
And that’s just what Labor is doing after a parliamentary inquiry concluded Australia should not scrap a scheme that offers cash rebates to some Australian shareholders at tax time.
Roughly 8% of all Australians would be negatively impacted by Labor’s plan.
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Labor’s new policy
According to the Australian Associated Press, economics committee members held public hearings across Australia to examine Labor’s proposal to no longer give cash refunds for ‘excess’ franking credits.
Ironically for a party that portrays itself as battling for the underdogs, middle and upper income earners will still receive full franking credits under Labor’s new policy, as they are able to deduct those from their tax payments.
The franking credits system came about in recognition that companies have already payed the corporate tax rate on the dividends they pay out to shareholders. Taxing those dividends again equates to double taxation.
When a person’s income is below a certain threshold and the franking credits exceed the tax they owe — as is the case with many retirees — they receive a cash refund instead.
Labor has labelled the cash refund, which amounts to a $5 billion annual budget hit, as ‘unfair revenue leakage’.
But as the AAP reports, committee chair Tim Wilson reached a starkly different conclusion. He revealed the inquiry’s report on Thursday, noting that many self-funded retirees depend on the franking credit refunds to make ends meet.
Speaking to parliament, Wilson said:
‘Those who have made their voice heard put worrying stories to the inquiry. A government that seeks to steal the overpaid tax of Australians does not deserve office.’
Retirees receive unwelcome news
With the federal election looming on the horizon, you wouldn’t expect Labor to meekly accept the committee’s damning findings.
Indeed, Labor MP Matt Thistlethwaite, the committee’s deputy chair, said, ‘This inquiry has been a farce from the outset.’
His ‘farce’ argument is based on the fact that some 1,000 submissions were made through a pre-filled form on the committee chair’s website. He also said the inquiry should have included more formal witnesses, rather than giving people three minutes each to air their concerns in ‘town hall’ like meetings.
Retirees dependent on the $5 billion annual ‘revenue leakage’ to pay their bills received further unwelcome news on Thursday.
Despite the parliamentary inquiry’s findings and growing push back from the public, Shadow Treasurer Chris Bowen said Labor would not back down from its policy to claw back franking credit refunds from some of Australia’s lowest earners.
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