The campaign comes on top of the newly-formed Alliance for a Fairer Retirement System, which has vowed to make the Bill Shorten’s plan to remove $75 billion from superannuation benefits and retirement incomes an election issue.
In a web poll run by Wilson Asset Management, 70 per cent of respondents said they would lose between $5000 and $30,000 a year if franking credits were no longer refundable.
A further 13 per cent said they would lose $30,000-plus annually as a result of the change, which the Parliamentary Budget Office has calculated will increase revenue by $55 billion over the next decade.
Mr Wilson said Mr Shorten would end up on “the wrong side of history”.
“Labor has pushed this ill-conceived policy by claiming it would only hurt the rich and deliver significant savings for the government,” Mr Wilson said.
“Far from being ‘rich’, 69 per cent who completed our poll earn $90,000 or less a year and 53 per cent would be forced to reduce their family’s living standard and quality of life in order to accommodate the loss of income.”
Franking credits are paid to shareholders to account for tax paid at the corporate level. For people who pay little or no tax, such as super funds and retirees, excess credits are paid out as refunds.
But Labor will scrap what it calls a “tidy little arrangement the nation can no longer afford”.
“We are going to stop multi-millionaires’ welfare funded by the taxpayers of Australia,” Mr Shorten said when the policy was announced earlier this year.
In response, the Alliance for a Fairer Retirement System has been formed. It is comprised of a range of groups representing shareholders, SMSFs, stockbrokers, financial advisers and seniors. The alliance, which claims to represent millions of voters, is encouraging people to write to their local MP.
For SMSFs in pension phase, the policy will effectively impose a 30 per cent tax on profits received from Australian shares they own, the alliance says. “This is an unfair outcome for people in retirement phase, and a targeted tax on a popular asset class which is not replicated anywhere else in the Australian financial system,” it says.
The alliance is highlighting Labor policies that will, combined, generate revenue of $75 billion between 2019 and 2027. Along with the franking credit changes, the cap on concessional contributions to super will kick in earlier, as will the point at which high-income earners are taxed more on super payments.
But Labor isn’t backing down. On the franking credit proposal, Shadow Treasurer Chris Bowen told a recent Association of Superannuation Funds of Australia event: “We are seeking a mandate for this.”
Most SMSFs are heavily invested in domestic stocks and fully-franked dividends are a large part of the motivation for this.
Yet, as Labor points out, Australia’s dividend imputation system did not always offer cash refunds and even now more than 92 per cent of taxpayers do get a refund.
This is because they have enough of a tax liability to use up tax credit, which is usually 30 per cent in line with the rate of big businesses.
Wilson Asset Management started an online petition to ‘save’ franking credit refunds on May 11 and it has attracted 12,000 signatures (Plato Investment Management is running a similar petition).
“The petition data is reliable as it strips away duplicates, meaning it requires unique identifiers such as a first and last name,” Mr Wilson said.
Wilson Asset Management then emailed poll questions to its clients and just under 3000 responded. It is important to note that the questions were pitched squarely at the disaffected.
For example, respondents were asked to nominate one of three responses to the proposed franking credit change: I will spend my financial assets to qualify for the age pension, I will reduce my family’s living standard; or, I will not change my lifestyle.
Half nominated the second option, while 28 per cent said they would spend their assets to qualify for the age pension.
Seventy per cent of respondents were men and most were aged over 61. People were also invited to leave comments.
Revenue and Financial Services Minister Kelly O’Dwyer said it was the latest in a long line of evidence that “Labor’s mega retiree tax is hitting Australians who have worked hard to save and support themselves”.
“This $55 billion tax slug will hit mum and dad investors and self-funded retirees, not millionaires and high-income earners who will continue to access the full value of their franking credits,” she said.