The current imputation cash refund system is, essentially, a reverse death duty: low and middle-income earners are subsidising the estates of the very wealthy by giving them cash payments from general revenue – that is, from all taxpayers’ contributions to the federal budget – so they don’t have to draw down on their own savings but can hoard that money for their own kids.
It’s both unfair and, at an annual cost of more than $5billion in forgone revenue annually, unsustainable.
Labor’s proposed changes are projected to raise $10.7 billion, in the first two years, and $55.7 billion over a decade.
Given the challenge of funding the National Disability Insurance Scheme, our early childhood education and aged care sectors, and our schools and hospitals, this a responsible measure by which to raise revenue without imposing higher taxes on low and middle-income earners.
So next time you hear a wealthy retiree complaining about losing their “income” from excess franking credits under the ALP policy, remember that all that may be required for them to maintain their lifestyles is for them to draw down on their own savings, and pass a little less on to their kids, rather than asking working taxpayers to keep subsidising their estate planning.
