Last month, Labor leader Bill Shorten announced the party planned to end cash refunds for excess imputation credits, a move widely panned by the financial services industry.
Speaking at a media event organised by the FSC and BT yesterday, Mr Bowen said the backlash had been expected but that the party stands by its proposal, arguing that much of the opposition to the policy was the result of scare-campaigning targeting pensioners.
“The political problem facing us is that the vast majority of pensioners were unaffected, 90 per cent of Australians were unaffected, but because of scare campaigning many thought they were affected,” he said.
“The vast majority of the revenue was coming from the top 20 per cent, and self-managed super in particular. A very small amount of money was coming from the low end, but that became a political issue.”
Mr Bowen said dividend imputation was an important feature of the Australian economy, but the refunds currently available for excess imputation credits are not an important part of that.
“It would be wrong to get rid of dividend imputations,” he said.
“Dividend imputation in itself, in the 1987-2000 model, avoids double taxation, and that should be avoided, that’s the right model. It’s transformed the way capital is formed in Australia. The refundability of it is not integral to capital formation.
“At $8 billion a year – which is what [imputation refunds are] growing to – it’s simply unaffordable, and not justifiable in policy terms.”
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