Despite opposition leader Bill Shorten’s attempts this week to reassure pensioners they would be better off under a Labor government, the party confirmed today that no compensation will be paid in relation to proposed changes to scrap refundable tax credits on share dividends.
The party’s finance spokesperson Jim Chalmers told Sky News today that Labor was not considering a compensation scheme for pensioners and part-pensioners as had been reported in various media outlets.
“Some of those stories which have appeared today are not accurate,” Chalmers said.
“I think they just pick up on the obvious point that Bill Shorten made yesterday, which is, for some, but not all, pensioners whose income is impacted by what we’re proposing, that will be factored into the income text for the pension…and some people will see a change to their part-pension.”
The Keating government first introduced the scheme to ensure company profits were not taxed twice – once with company tax and a second time through personal income tax.
In 2000, the Howard government changed the scheme to allow investors to get a cash refund from the government if their tax imputation was more than the tax they owed.
The scheme currently costs the taxpayer $8 billion in refunds to people who do not pay any income tax.
Senior Labor MP Anthony Albanese tried to defend his party’s proposed policy, telling 3AW’s Neil Mitchell in an interview, “I accept this will have adverse impacts on some people, but, by in large, the impact is very much on the top end. Fifty per cent of these cash refunds go to the 10 per cent of funds”.
When pressed about the policy’s impact of the “collateral damage” on pensioners and low-income earners, Albanese avoided the question, instead responding that the party was clearly flagging the policy well in advance of the election and any legislation changes, “so that people can have certainty about their tax arrangements.”
Albanese described the current tax credit refund policy as a tax loophole that “we cannot simply afford, when we have debt above half a trillion dollars now, under this government, when we have increased deficits going out – when we have a $6 billion figure…rising in a couple of years to $8 billion, you need to make choices. Government is about choices.”
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