Franking Credits Back on Labor’s Chopping Block?
Labor MP Tony Rankenfile has rekindled debate over franking credits in a public outburst that has the party Whips polishing their truncheons. Seemingly unhappy that Labor Leader Anthony Albanese put the policy to rest earlier this year, Rankenfile has attacked his own party for giving up so easily.
‘We’re talking about stopping people from getting a refund for owning shares so that we can spend money on health and education. $60 billion over ten years. Meanwhile, the coke heads over in funds management relabel our policy a “retiree tax” and get it killed!’
Rankenfile was referring to the aggressive campaign against the proposal led by fund manager George Watson, who has more than $4 billion in funds under management. Watson had celebrated the axing of the policy as a win for common sense. ‘Once you have a system with unreason baked into it you just have to respect that. You can’t go around fixing things as if the public interest were the relevant benchmark for public policy. That would turn the world upside down.’
Labor’s policy was to return to the pre-2001 policy, the period before tax reform came to focus on the needs of Boomers in retirement. These changes would still allow imputation credits to be used to cancel tax owed to the Tax Office. The key change was only to stop paying refunds for unused credits.
The merits of the change are not at issue, however, only the politics. Treasurer Josh Frydenberg is reportedly so ecstatic at the policy’s resurrection that he sent a case of Veuve Clicquot to Rankenfile’s office. An anonymous source close to Frydenberg said that the Treasurer gloated ‘We had an army of Boomers going to war for 0.5%! I mean if you have a million bucks we’re talking about $5k! That’s when I realised that we’re not really the party of business, we’re the party of rich Boomers!’
Frydenberg’s assessment may be correct. The average older household (65+) now pays less tax than they did 20 years ago while drawing more heavily on the budget, despite incomes and wealth rising over that same period.1
Rankenfile seems open to an intergenerational truce. ‘Let’s just grandparent the thing in – it will only come into effect once the Boomers are dead. We all know that’s the pre-condition for rational policy change in this country.’
Ian Intitled, a leading advocate of Boomer interests in relation to tax policy, was dismissive of the idea of a truce. ‘We will use the superannuation system to pass on our wealth to our grandchildren. And they will then have every right to defend their interests. This system will not change after we die. That, by the way, is 50-60 years off based our modelling. So my advice to Generation Complaint is this: try and work half as hard as we did and you’ll be alright.’
Citations:
1 https://grattan.edu.au/wp-content/uploads/2018/11/The-implications-of-removing-refundable-franking-credits-Grattan-submission-.pdf
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