Labor’s retiree tax hits hardest for low earners
THIS
week, the Labor Party confirmed that they will under no circumstances change their $55 billion retiree tax.
It follows Shadow Treasurer Chris Bowen’s arrogant dismissal of the concerns of over one million Australians affected by the retiree tax, telling them if they don’t like the policy then they should vote against Labor.
Make no mistake, the people being targeted by Labor have done nothing wrong except diligently plan and save for their retirement. This includes around 20,000 people in Tasmania. These are people, like Rose, a school teacher in her early 50s, living alone in a onebedroom unit, who through her selfmanaged superfund is aiming to retire with savings that generate an income of $50,000 a year. Under Labor’s policy, she stands to lose over $10,000 and is wondering whether she should change her asset allocation and go on the pension. In the words of one of her colleagues, Rose is “distraught” and “doesn’t understand why Labor are going after the little people”.
“School teachers vote Labor,” her colleague said, “but come the federal election there is no chance.”
This is just one story of many reflecting the deepseated anger in the community about the unfair and arbitrary nature of Labor’s retiree tax.
It’s not unintended that Labor is sparing those in union-associated industry funds, targeting individuals and self-managed super funds, for those are aspirational Australians who Labor considers easy targets.
Indeed, under Labor’s plan, individuals will be on average $2200 worse off and selfmanaged super funds $12,000 a year worse off.
No wonder Professor Ralston from the Alliance for a Fairer Retirement System said Labor’s policy was a “cruel blow” to retirees with the result being to “drive many retirees onto welfare”.
Others said it would create “a two-class system of retirees: one group protected; the other not”. The Australian Shareholders Association said the tax would penalise “retirees who have saved for their retirement and invested in Australian companies”.
How can Labor claim its policy is fair when a highincome earner on $200,000 a year with $7000 in share dividends receives the full benefit of their $3000 in franking credits, whereas Rose the 53-year-old teacher on a much more modest income is denied the benefit of her franking credits?
Labor’s retiree tax falls hardest on low-income earners, particularly women. Over 80 per cent of those affected have a taxable income under $37,000 and over half of those affected are women. Of those women, two-thirds are aged over 60 and almost half are single or widowed.
What is more, despite Labor’s claims to the contrary, age pensioners are clearly hit. If a pensioner established a self-managed super fund after March 28, 2018, they would fall foul of the tax. So too, people in a self-managed super fund who become pensioners after the same date.
This covers thousands of people and exposes Labor’s socalled “pensioner guarantee” as a lie and not worth the paper it is written on.
The flow-on impacts to charities of the tax will also be profound.
The Cancer Council of Queensland recently revealed some major donors advised they are “unlikely to be in a position to donate if this policy is introduced”.
Faced with a barrage of criticism over Labor’s retirees tax, Bill Shorten quotes Margaret Thatcher and says he is “not for turning”. The more fitting Thatcher quote that goes to the heart of the motive behind Labor’s $55 billion tax grab is “the problem with socialism is that you eventually run out of other people’s money”. As history shows, the Labor Party can’t manage money, so they are coming after yours.