Retirement, Tax

Labor voters turn against franking credit plan

More than three-quarters of Labor voters surveyed by a boutique fund manager planned to change their vote as a result of the opposition’s plan to ban franking credit refunds if it wins the upcoming federal election.

A survey of 4000 people conducted by Wilson Asset Management (WAM) found 77 per cent of Labor supporters were planning on changing their vote and 47 per cent of all respondents stated their children or grandchildren would do the same in response to the proposed changes.

Speaking with selfmanagedsuper, Wilson said he was surprised how dominant the issue of franking credits had become during the election, as reflected through the extensive media coverage since January, but also felt it was important for himself and WAM to move the issue into the public arena.

“We have 80,000 shareholders, the bulk of whom are in SMSFs or are retirees on modest and low incomes, and we felt it was important to stand up for them and move this issue into the public arena because it is a complex issue, but it is also unfair, inequitable and illogical,” he said.

“There has been a significant political underestimation of this issue by the ALP and that has been reflected in our survey results, where half of the children or grandchildren of shareholders have also indicated they will change their vote over this issue, and that is a very strong message being sent to the opposition.”

In a newsletter from WAM, he said the regressive nature of Labor’s franking credit proposal was reflected in the survey, which also measured the amount of money people claimed they were likely to lose if franking credit refunds were removed.

“The people who will bear the brunt of the policy are primarily low and middle-income earners, with 70 per cent of those surveyed indicating that they earn $90,000 or less per annum,” he said.

“Under the proposed policy, each year 13 per cent of respondents will lose up to $5000, 23 per cent will lose between $5001 and $10,000 and 19 per cent will lose between $10,001 and $15,000.”

He also highlighted that 50 per cent of respondents claimed they would reduce their investment in Australian shares and shift to global equities, while 29 per cent would invest more in other asset classes, such as real estate, and 20 per cent would spend some of their assets to qualify for the age pension.

Earlier this week, he said he would continue to push against the proposal regardless of which party won the election and added that nine cross-bench senators had indicated they would oppose the proposal if introduced into parliament.

He said that yesterday he met with Centre Alliance senators Rex Patrick and Sterling Griff in Adelaide, adding: “Both senators confirmed their opposition to the retirement tax and restated the party’s commitment to blocking the proposal if it reaches the upper house.”

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