The upcoming federal election has led the government to ramp up its criticism of the opposition’s economic agenda, warning Australians that Labor "cannot be trusted".
A media statement from Treasurer Josh Frydenberg this week quoted former OECD director Professor Adrian Blundell-Wignall, who said that Labor’s retiree tax policy “punishes those who looked after themselves for retirement.”
He warned that Labor’s tax would cause “economic damage” including a “cut into productive investment”, more financial gaming and increased company debt, leaving the economy more exposed to shocks.
According to the former OECD director, Labor’s retiree tax “will be imposed retrospectively, making a mockery of the policies that were the basis of lifetime saving and asset allocation decisions – a real no-no of pension policy thinking in the OECD. It undermines the principle of choice based on a level playing field.”
The OECD released its Corporate Tax Report on Tuesday, which noted that Australia’s marginal effective corporate tax rate is on the upper end when compared to other OECD countries and that lower taxes are important for competitiveness.
The OECD’s Corporate Tax Statistic Report shows the downward global trend on corporate tax rates, with the average rate falling by 7.2 percentage points from 28.6 per cent in 2000 to 21.4 per cent in 2018. The OECD report highlights that tax is a factor that drives cross-jurisdiction competitiveness for investment.
“The Liberal national government introduced legislation to reduce Australia’s company tax rate and increase our competitiveness internationally, but Labor voted against this tax relief,” Treasurer Frydenberg said.
“In typical Bill Shorten style he says one thing while doing the opposite.”
According to Mr Frydenberg, while minister for financial services, Mr Shorten said any student of Australian business and economic history since the mid-80s knows that part of Australia’s success was derived through reduction in the company tax rate.
“But when faced with legislation to do exactly that, Bill Shorten back flipped. Labor simply cannot be trusted,” the Treasurer said.
“Since, our government has prioritised providing tax relief for small business, securing the passage of legislation last October that fast-tracked tax relief for Australia’s 3 million small and medium sized businesses five years earlier than planned.
“As a government we are committed to supporting business, recognising that it’s the private sector that employs around nine in every 10 Australian workers. We understand that by providing tax relief, businesses keep more of their own money and have more to invest back into their business – to create jobs, to boost productivity and grow.
“What we won’t do is disadvantage businesses by increasing taxes, as Labor is planning to do.
“At a time when Australia is facing global economic headwinds, Labor’s plan is to introduce more than $200 billion in new taxes, that’s taxes on your business, your home, your savings, your energy bills and your income.”
Mr Frydenberg noted that Australia’s biggest companies are devising strategies to pay out their franking credits as special dividends, before Labor has a chance to “punish them” if they were to win government.
Mirrabooka chief executive Mark Freeman, who has announced his company is bringing forward their special dividend given the uncertainty around Labor’s policy, said: “We are feeling the potential pain of people if this rule comes in, and so let’s try and help them out now”.
He went on to say Labor’s policy is “very grossly unfair for investors and trying to shift the playing field in favour of managed funds over self-managed superannuation”.
Stimulate new ideas. Stimulate new thinking. Top up your CPD and hear from industry experts with InvestorDaily’s Knowledge Centre. Keep up to date with the latest trends and reforms, all while adding to your CPD. Explore the knowledge centre Knowledge Centre now.
Despite unemployment falling to pre-pandemic levels, the central bank still thinks it’s too early to count its chickens on the success of ...