I never thought I’d see the day whereby my views coincide with Robert Gottliebsen’s (“Gotti”). Nevertheless, he is correct to argue today that the Turnbull Government’s plan to cut the company tax rate to 25% from 30% would only benefit foreign owners/shareholders:
Guess who is going to cop it on the chin if we reduce the corporate tax rate for large listed companies? No prize for answering correctly. Yes, it is ordinary Australians who are saving for retirement or in retirement…
A huge chunk of the cost of the large corporate tax reduction will be borne by long-term investors because it substantially reduces the value of their franking credits…
In other words, if the corporate tax rate is reduced then the franking credit will also fall…
Overseas investors in our stockmarket are not eligible for franking credits… in essence, the people who benefit from the proposed large cuts in corporate tax are overseas investors in the stock market (subject to the manipulation described above) and overseas groups who own Australian businesses…
Coalition politicians and the big corporations in the Business Council are really beginning to push for lower tax rates in the full knowledge that the costs will be borne by local Australian investors…
Welcome aboard, Gotti. Better late than never.
