Crikey readers have come out swinging against the LNP’s less than stellar line of attack on Labor’s plan to get rid of cash refunds for franking credits. As they point out, it’s going to be hard for the Coalition to truly defend a “welfare for the wealthy”. Elsewhere, we received an insightful note on the issue of the commercial space industry and space-junk from an insider, and readers discussed the steps necessary for saving the Murray-Darling Basin.
On the franking fight
John Kotsopoulos writes: What none of the critics can do is name a single country that has dividend imputation (refund of tax paid by investors on their dividends) let alone tax free cash handouts for investors paying no tax. Nor can they explain why Howard’s mining boom era freebie should continue to be supported by borrowing as noted by economist Stephen Koukoulas.
Robert Smith writes: Labor is fighting back with the “welfare for the wealthy” line, and by pointing out that someone who gets a cash refund of franking credits of $5000 has share assets of about $250,000 and dividend income of about $10,000. Those who write letters to the papers claiming it will cost them $30,000 have about $1.5 million in shares.
Mary Wood writes: Instead of accepting that they have been very lucky to get away with this for so long they man the barricades in the MSM. Where were all these journalists and freedom fighters when low-paid people lost penalty rates and Centrelink started its robodebt iniquity?
Annalise Lampe writes: This term “retirement tax” is nothing more than an easily repeated lie. It is merely removing an unjustifiable and unwarranted taxpayer cash payment subsidy. These people are fond of describing themselves as self funded retirees; they are not. What makes them think they are entitled to an additional tax funded payment?
On Australia’s space industry
Andrew Dempster writes: You illustrated today’s article with a picture of UNSW-EC0, one of the satellites built by the Australian Centre for Space Engineering Research (ACSER) at UNSW. That satellite, and the other one we developed with USyd and ANU, INSPIRE-2, both de-orbited in December last year. It’s possible to design missions that don’t create space junk!
On the fate of the Murray-Darling Basin
Roger Raven writes: Given the challenges of enforcing coordination between states, we should follow the lead of Keating, Reith and Howard. It is time to use the Commonwealth’s powers over constitutional corporations to drive not just policy but also practices in both the energy and the hydro spheres, just as they did with industrial relations.
Too much of the debate is literally about the water. Complaints about water use are complaints, ultimately, about a governmental/social/economic system focused not on sustaining a river system, but on looting it then leaving the bones for the crows. We need active government involvement in agriculture, both through Government Business Enterprises (such as what the Australian Wheat Board was) and the supply of policy and capital. KPMG itself has acknowledged that “fragmentation has hampered [agriculture’s] ability to address and progress important issues in a cohesive manner”.
Combining statutory production authorities with support organisations to fund and direct restructuring of agriculture and other land uses within the Basin plus a skilled and professional regulator will better use resources. It will also keep experienced farmers on the land, while giving younger ones much more confidence that farming is a serious career option. Ecologically, farmers still have a lot to learn.
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It seems that only New Zealand operates a similar dividend imputation scheme, although excess credits aren’t refunded.
Hong Kong and Singapore are interesting in that they don’t tax dividends.
http://taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/Papers/Final_Report_Part_2/chapter_b2-3.htm
The comments in the guardian claiming those retirees claiming to lose $30,000 off their income and therefore have $1,500,000 in shares over the franking credit issues, show how little they understand the facts or are real victims of this issue, the simple fact is if you earn, as a couple $80,000 a year and above, you have to pay tax on your retirement income and as such will still get your 30% franking credits off their taxable income, so the wealthy lose nothing , those on minimal and low incomes do not pay tax, so couple on $40,000 a year will lose $12,000 P/A off their income, these people also have saved the taxpayers hundreds of thousands of dollars by not claiming the aged pension over their retirement life and most will have worked hard all their life to set themselves up in retirement, and what about the politicians who receive vast pensions on retirement tax free, with travel perks and they can work as well with no loss of entitlements, this is nothing more than a stunt to win votes by painting these people as rich bludgers when the opposite is true, the only fair way is to grandfather the changes just as they did with negative gearing, this protects the ones that simply did as their advisers told them and which was perfectly legal and proper at the time and gives incoming retirees time to invest in other income producing streams, and it should also be remembered that retirees in most European countries, including Britain can claim the old age pension as a right as well as the superannuation and in some countries, like our politicians, work as well, after all, we pay tax to cover the pension all our working lives and self sacrifice to pay super as well, its our money, not the politicians to steal.
Yes, that’s true. If a couple has a combined income from fully franked dividends of $80,000 a year, and the shares are divided 50/50.
But why should a person on $40,000 a year get it virtually tax free (the Medicare levy I think is still payable), and in addition get a bonus of $12,000 from the taxpayers, many of whom are paying tax on incomes considerably less, and with other expenses not applying to the average retiree such as a mortgage, raising a family, the costs of going to work, HECS, etc.
It’s not particularly fair.
And it’s a canard that retirees have paid taxes their entire working life to fund their retirement. Their taxes were going to pay pensions for the then retirees.
There’s fairness. And affordability. Refunding excess credits is neither. Unless the person’s income is very low, which has been covered by the proposal to refund excess credits if the person is receiving at least a partial pension.
You don’t pay a full rate of tax the whole time you are accumulating super which is mostly paid to you by an employer. You don’t pay any tax on it after you retire like other sources of income that retirees are expected to do. Suck it up, bet you had nothing to say when this same govt cut the assets threshold in order to receive the age pension for people far less affluent than you.