Labor leader Bill Shorten has promised to look after hundreds of thousands low-income pensioners whose income would be hit by his plan to claw back almost $6 billion a year in tax credits on dividend payments.
“We will make sure that pensioners are OK, full stop,” Shorten said yesterday, after an angry reaction from shareholder and pensioner lobby groups to the proposal who saw it as an attack on a key source of their income.
Shorten has now indicated that he would provide income relief to some of the people whose household cash flows are reduced by the plan, which proposes cancelling cash rebates to shareholders under the franking credits regime.
The Australian reports Shorten is considering a payment supplement to offset losses to people affected. In effect this would be a welfare payment replacing income from dividends.
Just over a million people would be affected by the policy overall, many of them wealthy retirees but also people with share portfolios that currently deliver an income stream from share dividends. The government has accused the opposition of launching a “cash grab” targeting pensioners.
“For a person on the part pension they may get some taxpayer funded supplement to their shares – what we’re proposing is if they’re not getting some extra taxpayer funded bonus for income tax they haven’t paid, their part pension will increase,” Shorten said.
The proposed clawback of the tax credits, worth almost $60 billion over a decade, would provide a vast war chest for other spending promises such as income tax cuts and welfare increases ahead of the next election, while also keeping Labor on track to restore the federal budget to surplus.