The repercussions of Bill Shorten’s proposed retirement and pensioner tax, levied via banning cash franking credits, are much bigger than was first thought.
The Conservative Party will fight the changes but needs more Senators elected at the May federal election to be effective in stopping them.
The Australian reports, research by the ANU shows there may be significant downward effects on parts of the share market and the need for much larger sums to be added to retirement savings to maintain living standards.
It is also likely that that the demands on government pension expenditure will increase beyond current treasury estimates.
For the first time in our history we are levying a tax on the basis of who manages your money not the level of your assets and income.
It’s now time to look at the wider implications of this dramatic reversal of retirement policy to the society.
When the retirement tax was first announced, the ALP claimed it was an attack on the rich. That is simply wrong. Very few rich people would be affected and those that were, are able to easily modify their portfolios.
Thanks to research by the Self-Managed Superannuation Fund Association we discovered that there are close to 1.4 million people battling to fund their own retirement who will be hit hardest.
The ALP’s hit list includes aged government pensioners and thus the the retirement and pensioner tax moniker.
There are so many battlers being savaged that there is no doubt the ALP will raise its targeted amounts.
If Australian equities fall as a result of Labor’s tax-grab – which the ANU modelling suggests will be the optimal response – then a logical conclusion is that retirement balances will be significantly lower, and individuals will be increasingly attracted to accessing the age pension.
As pointed out by Michael Roddan this week Treasury research is showing that the Australian superannuation movement is doing the job Paul Keating envisaged: reducing demands on the government pension.
If Bill Shorten introduces his retirement and pension tax that trend will be reversed and while the ALP may hit its revenue targets, that extra money will need to be offset by a higher government pension bill.
And the ALP policy, as announced, is the first step in giving selected government pensioners a sharp clip under the ear.
Pensioners in self-managed funds will not receive cash franking credits unless they registered for pensions by March 28, 2018— it’s now a year too late.
Unless Labor changes the original policy, Bill Shorten’s statements that pensioners will not be affected are simply wrong.
To stop Bill Shorten and the Labor Party wrecking the Australian economy, vote “1” for your Conservatives candidate in the Senate.