Do-nothing Malcolm turns tax reform wrecker

Back in 2014 when Do-nothing Malcom was still pretending to care about policy he said:

“Looking at Australia’s tax regime you would say that it is too tough on people earning income… but is incredibly concessional to older people who have made their money…

All of these areas are very hard to deal with because any change invariably… [leads them]… to become very angry. That’s why reform is very difficult…”

In October 2015, newly appointed Prime Minister, Malcolm Turnbull, gave an interview with Neil Mitchell whereby spelled-out his vision for tax reform, noting that “everything” was on the table:

Malcolm Turnbull: We have to look at the tax system. The tax system is the single biggest thing that the Federal Government does that incentivises and dis-incentivises economic activity. If you tax something, people will do less of it – generally… There are a lot of changes that can be made to the tax system, which would improve the efficiency of the system… The tax system as it stands delivers a certain amount of money every year. The question is, can it be adjusted… Change has got to be orderly, it’s got to be well understood, it’s got to be well explained, it’s gotta be accepted.

Neil Mitchell: Superannuation, negative gearing, capital gains, GST, everything’s gotta be on the table?

Malcolm Turnbull: Everything is on the table, that’s right… We will certainly be making decisions in the lead up to the Budget and obviously if we have major tax reforms, we will take them to the next election.

Then in November, Turnbull preached that “fairness” must be central to tax reform:

“Any package of reforms which is not and is not seen as fair will not and cannot achieve the public support without which it simply will not succeed. Fairness will be central,” he told an economic summit in Melbourne…

“The primary purpose of taxation is provide the revenues to pay for schools, hospitals, infrastructure and a strong social safety net,” Mr Turnbull said.

“But we need to ensure the taxes we impose to collect these revenues aren’t overly distorting the economic decisions which workers, businesses and consumers make”.

In February 2016, Turnbull reiterated that “everything is being looked at” in terms of tax reform:

“Corporate concessions, superannuation… there’s a whole range of areas… We are looking at all of these areas. This is a very thorough evidenced-based examination… Everything is being looked at [including negative gearing]…”

Yet today, as Labor proposes what is clearly progressive tax reform in the removal of imputation credit concessions that overwhelmingly benefit the ages and wealthy, Do-nothing Malcolm has turned wrecker:

“Bill Shorten is robbing pensioners and self-funded retirees of tax refunds. He’s effectively taxing them twice,” Mr Turnbull said.

“This is an attack targeted on people on lower and middle-incomes. It is taking money from people who have worked and saved all their lives and are battling.

“So he can dress this up as much as he likes, but I tell you Australian pensioners, self-funded retirees, know who it’s targeted at. It’s targeted at them.

“Bill Shorten is coming for the savings, for the incomes, for the lifestyles, for the affordability of the cost of living of people on lower and lower middle-incomes in retirement.”

It’s always fine words and no action with this bloke.

 

Comments

  1. people who have worked and saved all their lives and are battling

    So Abbott and Turnbull have imported the working poor model from USA? Right.

    Thus, Turnbull is ranting against himself! 👏

  2. Shorten is going to effectively tax a self funded retiree or pensioner living off Australian share dividends 30% , whereas now the tax is 0. Have to agree with Turnbull. It’s theft. Might be good for the MB fund boys however, whose mantra is get your share assets off shore.

    • HadronCollision

      Very good sarc.

      Because you must be joking right?

      You don’t pay tax but you want that offset? GAGF.

      It’s 17 years old. Don’t like it? Fuggoff.

      Rules change.

      Jeez.

      The amount if resistance shows you that it’s good policy

      Bill’s problem now is cutting through the miasma of opposition

      WE’LL BE ROOOONED

      Poor old Kuddles Kelly was all at sea with Henschke from the NRA (National Retirees Association) this morning
      Run rings around her

      • The amount if resistance shows you that it’s good policy

        ie, if right wing pricks are ranting against a tax proposal, it is a good proposal. Just like Bowen’s negative gearing proposal and any UBI proposal.

      • wheres the money for UBI going to come from smart arse???
        Are the magic F#%^ing commie pixies going to sprinkle it from red heaven?

      • HadronCollision

        Excellent conflation of a not even in the realms of policy formation straw man (UBI) with this very real issue.

      • HC

        Has Shorten just given a clear signal to all retirees to sell shares and buy property ??

        Property inside SMSF is looking like a clear winner if this imputation is abolished.

        Will this not increase the scramble for property as the SMSF trustees enter the market en masse.

        The losers will be the young looking for a home and the winner is the FIRE industry helped along by Labors’ Shorten.

        The irony is lost on the very gullible young Labor voters.

    • I can’t agree it is theft. It simply puts a floor under the amount of tax paid on company earnings. It was ludicrous Howard and Costello instituted refunds of imputation credits.
      As for Malcolm now denouncing what he once championed, they all do it. That is why we despise them. Expediency always overrules good policy.

      • The dividend recipient’s tax position has nothing to do with the existing policy and the tax paid by the dividend paying company has everything to do with it – what you are saying is that you would be happy for a person earning $250K on the 48% marginal tax rate to pay an effective rate of 18% on a franked dividend, but you would not be happy for a person on $20K to receive that exact same benefit in the form of cash? Why exactly? Remember the only reason you would be receiving the imputation benefit in cash is that you are not in a taxable position, meaning you must be earning less than $20K pa.

      • @stiches – wrong. Retiree with $10m in SMSF in “pension phase” will get hundreds of thousands of dollars of imputation credits refunded.

        The $20k cap is for the mere mortals.

      • @peachy, no not wrong at all, I was talking about individual taxpayers. If you are making the argument about HNW superannuation (and thanks for the extreme example), then make the policy about HNW superannuation. You also failed to mention that the same loss of tax credit applies to a $50K income earner with $150K in superannuation. There’s no hiding from the fact that the policy creates a distinct tax advantage for an individual earning $500K receiving a franked dividend over an individual on $30K receiving the same dividend.

    • adelaide_economistMEMBER

      Comical definition of theft. Right up there with the overuse of the phrase ‘sovereign risk’.

    • LOL! Great definition of “theft” there. So, somebody pays no income tax and then gets someone else (eg. Torchwood1979) to pay more tax so they can get a tax credit? You really live in an upside down world.

      • Yep. Howard’s battlers = a mob of entitled knobs who expect something for absolutely nothing.

      • But presumably you’re OK to retain the circa 18% tax benefit for someone earning $500K, just not for someone on $20K?
        Inconsistent and populist policy tinkering once again from this pair…

      • HadronCollision

        The NRA this morning tried to tell us that a whole bhunch of the affected people would go on the pension

        Notwithstanding this was made without any evidence, they’re already subsidised by the taxpayer for their “tax credit refund” (when they don’t pay tax)

        Most sensible folks can agree this is a rort

      • @hadroncollision
        “they’re already subsidised by the taxpayer for their “tax credit refund” (when they don’t pay tax)”
        That’s the point, they are not subsidised any more than someone who is paying $100K pa income tax. The company paying the dividend has already paid 30% tax, so whether that means a tax deduction or a tax refund in the hands of a shareholder is irrelevant. Whether a franked dividend recipient is paying tax or not has no bearing on the overall tax system. All that Shorten is doing is removing the benefit from one class of personal taxpayer (low to middle income earners) and successfully doing that under the guise of ending a rort or improving equality. It’s a master stroke of voter manipulation that highlights the willingness of the ALP voter base to follow blindly. Sure, some very high value super funds get a disproportionate benefit from dividend imputation, but why penalise a much broader range of taxpayers to address this much narrower problem?

      • Excellent points Stitches, but no point debating with the wilfully deaf, dumb and blind. They actually want double taxation, go figure. They probably received the $5000 baby bonus, child care assistance, plus all the other middle income tax refunds offered by J Howard, paid for by the taxpayer. The politics of envy is a Labor party ( double ) standard.

        If the Australian Superannuation system is soo fantastic why does Turnbull have most of his money in tax haves like the Bahamas. Why do politicians have so many IP’s and Family Trusts ??; because they and most public servants have Defined Benefit Superannuation and care not what the ASX is doing.

        Open question to any financial advisor; how will this affect retirees that have negative geared properties in their SMSF which are tax free when sold. Will they still get their negative gearing refunds plus all the other deductions as a tax refund.?? If so, then watch a huge shift in SMSF portfolio asset allocation.

        If the SMSF trustees sell their shares and start buying real estate for their retirement income then the young on this site who are waiting for a fall in property prices will have to wait until hell freezes over. Shorten has just given a clear indication to sell shares and buy property. The FIRE industry needs help from Labor.

        Almost all Australian Super funds have shares in their portfolio but little or no exposure to real estate. So a double whammy for everyone who has superannuation when they watch their inaccessible super just spluttering along or going backwards.

        Conspiracy theory that Shorten and Labor want to destroy the SMSF industry as the Labor managed Industry Superfunds are bleeding funds to the SMSF industry. Consequently, Labor and the Unions are losing money and future job prospects.

        Why not tax the foreign nationals ? Exxon, Shell, Apple, Google, Amazon. Simple really and the SMH have a story about this today.

  3. Dont credit the oldeis with any more financial sense than the youngsters, indeed many youngsters were coached -supported by the oldies.
    But in my observation of the GC, the pensioners have pissed money away like drunken sailors.
    Homes full of trinkets, 60 grand V8 car, at least 2 to 4 trips to Europe or Africa or Egypt a tinny and a pet.
    Now, recently last 9 months, they realise the loot will run out much before the IP can be sold or the Super can be cashed in.
    They have really pulled their heads in, here at least.
    When the Super fails and the IP sales come in short, then there will be some angst.
    Big time. HUGE angst

    • The oldies have screwed the next generation:

      How the baby boomers — not millennials — screwed America

      The boomers inherited a rich, dynamic country and have gradually bankrupted it. They habitually cut their own taxes and borrow money without any concern for future burdens. They’ve spent virtually all our money and assets on themselves and in the process have left a financial disaster for their children.

      We used to have the finest infrastructure in the world. Now it’s crumbling, and the boomers have allowed it to crumble. Our public education system has steadily degraded as well, forcing middle-class students to bury themselves in debt in order to get a college education.

      https://www.vox.com/2017/12/20/16772670/baby-boomers-millennials-congress-debt

      • Well that is 1 opinion
        My opinion is that the youngsters have failed to run with the ball.
        thinking they could inherit a fully paid for social existence.
        well plenty of things have changed, but the rules of business still apply,
        go all the way back to the parable of the Talents. Good guidance.

      • Ah yes. Get American students to have lots of college debt and then give the jobs to H1B visa staff anyway.

        JFK deported illegal Mexicans in order to give Americans a fairer chance and now Clinton says it would be racist to deport illegals.

      • @wileyWolf: The youngsters have been handled a hand grenade, not a ball by the baby boomers.
        – The baby boomers have screwed the young on the housing front, forcing up prices through tax subsidies and NIMBYism.
        – They’ve screwed the young on the superannuation front, turning our retirement incomes policy into a colossal vehicle for tax avoidance.
        – They’ve screwed the young on private health insurance, with massive subsidies for themselves and the threat of punitive taxes for young people if they don’t sign up.
        – They’ve screwed the young on the education front, enjoying high-quality free or subsidised higher education while imposing expensive, poorer-quality higher education on the young.
        – They’ve screwed the young on the debt front, handing massive government debt on the young to pay back.

      • E, well if you think you have a live grenade, as seen in the cartoons, toss it back before time is up
        each of these points you make could be easily enacted by legislation promoted by youngsters for their benefit
        for a couple of years now, it has been a mystery as to why the youngsters goof off to their room instead of taking up a political stance, and making things happen.
        the society we live in now does not thrive on inaction, it needs to be constantly upgraded, if the youngsters dont move in the next 6 months here, there will be nothing left.
        Like hiroshima after the bomb. (maybe the existing mob are counting on that inaction?)

  4. Has anyone asked Turdbull why he inisted a royal commision into the banks was not required given the immediate admisions of hidden malfeasence by banks and the commision is just starting.

    What a liar.

    • Coz Mal’s friends are in on it.

      I think Mal understands what is happening and wants to keep it under wraps. Check out @denisebrailey’s twitter, my head is spinning. The situation may be much much much worse than anyone suspects.
      Don’t forget Mal is in balls deep with the banking crowd. Look up his background….

  5. As usual the government are attacking it the wrong way (as they did on negative gearing).

    They should be pointing out the hollowness of the ALP policy in that all it does is encourages SMSF investors to roll their super/pension into an industry fund who isn’t caught by the changes in practice.

  6. Diogenes the CynicMEMBER

    Doesn’t this change mean most super funds will now reduce their ridiculous overweighting to Aus assets? In the long run this might even be good for their capital gains…

  7. proofreadersMEMBER

    Time for Do-nothing, ScoMo, Cormann etc also to start ranting and raving about “reds under the bed”?

    • No reds under there mate. No room as thats where the savings is. But theres room in the closet, the gays have come out now. Boom tish.

  8. I heard ScoMo pointing out to us that this policy would affect people in the lowest tax brackets. No kidding, Sherlock?! If they are currently paying no tax at all but getting a refund, obviously they aren’t going to be in the “high” tax brackets, are they? To take a more interesting angle – do you think this policy might encourage some companies to pay smaller dividends, and keep a larger portion of their profits for reinvestment?

    • They get a refund because the company paying the dividend has already paid 30% tax – the argument is that the gross benefit is not linked to the income circumstances of the shareholder. There is a distinct irony in the fact that someone on $1M pa will continue to receive the imputation benefit in full and someone say semi-retired with $25K in other (non-dividend) income will not. I can’t see how this policy will materially change dividend policy because companies do not know the individual incomes of their shareholders, however if a large number of people receive lower effective dividends (inclusive of tax “refunds”) it would more likely put pressure on companies to increase dividends.

  9. Ross Gittins speaking at 6pm tonight. Newcastle Institute forum. Souths Leagues Club Merewether. Topics: Rent-seeking, the ‘game of mates’, and the stuff-ups of economic reform