Written by Professor Bob Deutsch, CTA, Senior Tax Counsel
The recently
released “Report on the Inquiry into the implications of removing refundable franking
credits” is without doubt one of the most peculiar documents ever to be
released by the Parliament of Australia.
To put this in
context, this report was the culmination of a reference made by the Treasurer,
the Hon. Josh Frydenberg MP, to a Committee which was set up to inquire into
the removal of refundable franking credits. In particular, and I quote “The
Treasurer asked the Committee to inquire into and report on the implications of
removing refundable franking credits, and, in particular, the stress and
complexity it will cause for Australians, including older Australians who will
be impacted in their retirement.”
I say this is the
strangest of reports because it is so fundamentally politically motivated, and
to use a Parliamentary Committee to report on a measure which has been
suggested by your political opponents is in my view as outrageous as it is a
misuse of public money.
So that there is
no confusion, I have commented previously on the two views that exist in
relation to Labor’s proposal and on balance, I am certainly not in favour of
what Labor is proposing in the context of denying excess imputation credits.
At
the very least, my view, as I have expressed previously, is that if Labor
wishes to move in that direction, they should do it on a phased in basis rather
than cutting it off from one day to the next. It must not be forgotten that
this refund benefit has become an amount which people, most particularly
retired people, have come to rely on as part of their retirement income. After
all this benefit has now been in existence for some 19 years and it is quite
legitimate for people to expect that it might be turned off more gently with a
phased withdrawal of the amount of the refund perhaps over a few years rather
than in one fell swoop.
Be that as it
may, it nonetheless does not change my view, that using a parliamentary process
to fundamentally challenge your political opponents view is utterly
inappropriate. I would add that it is particularly even more galling that the
language used in the reference to the Committee is so heavily biased against
the Labor party’s proposal. To refer to stress and complexity it will cause for
Australians, including older Australians who will be impacted in their
retirement, is very clearly an attempt to pre-judge the outcome of what is
supposedly an independent parliamentary inquiry.
I do not believe
that there is a precedent for the use of a parliamentary process which is
equivalent in any way to what has occurred here. I certainly hope that future
governments do not use this as a precedent to rely on for similar inquiries
beyond this election.
No doubt members,
who perhaps take a different view, will point me in the direction of other
inquiries where something similar has happened.
Members, we welcome your thoughts via the TaxVineFeedback inbox.
