by Senator Fraser Anning
With the chances of a Labor government after the next election looking strong, it’s time to start looking at what this will mean for Australia.
For many people in their retirement years, the answer is going to be Treasurer Chris Bowen dipping his hand into their pockets to help himself to their cash.
Labor’s dividend imputation policy is a direct attack on people who have done the hard work to look after their own retirement rather than relying on the government for a pension.
“Dividend imputation” sounds complicated, but it’s simply a practice of not taxing the same money twice. If you own shares in a company – for example, in a self-managed super fund – then that company has to pay company tax on the profit it earns. You, as a part owner of the company, get a cut of that profit as a dividend from your shares – and without dividend imputation you would be paying income tax on that profit as well. The system is fair and reasonable, so of course the Labor party wants to change it. Their key complaint is that some people owe more in company tax than they do in income tax, so the dividend imputation doesn’t only offset their income tax but actually entitles them to a refund. But this is as it should be.
There is no reason why Carol should pay more company tax than Bob, just because she earns less. Indeed, this runs the opposite way to our intuitions. If one person must be taxed more, we feel, shouldn’t it be the person who earns more? But that’s not how the Labor policy works. The person with the higher income gets the full benefit of dividend imputation, while the person with less loses their refund. Labor frames this policy in class-warfare terms, saying they are addressing an “unfair revenue leakage” that puts a “greater tax burden on low and middle income working Australians”.
And it’s true that the people who benefit from the current system are wealthier than average. But that is in large part because they are older and have been working to get into that position their entire lives.
Building wealth over a lifetime is not simply a function of income. It is a function of fiscal discipline. Plenty of people of modest means manage to save a substantial nest egg, while plenty of others with high incomes manage to splash their cash away. We need our policies to reward those who choose not to go on that cruise, or to buy a smaller house, or to live with a cheaper car, so that they are able to support themselves in their old age. If we don’t, why would they make those sacrifices?
If we are just going to treat them as an ATM to be returned to whenever the government feels like it needs a bit more cash, then they might as well just spend their money on themselves instead of waiting for the government to come and get it. Then they can rely on the age pension like everyone else. And that is what will truly put a greater tax burden on lower and middle class Australians. Of course Labor doesn’t understand fiscal discipline, or the kind of people who exercise it.
What we need is policy certainty in this area. People make saving and investment decisions for their retirement over decades. They need the confidence that the rules aren’t going to be suddenly changed and the rug pulled out from under them when they actually get to retirement.
It seems unlikely at this point that the Liberal party will be able to pull its act together enough to prevent Labor from winning government. However, that does not mean that their misguided policy is sure to become law. A strong vote for Fraser Anning’s Conservative Nationals will give us the numbers in the Senate to be able to fight this attack on retirees – and more that are sure to come from an emboldened Shorten government.