Playing the ref with a fake tax
The Liberals are playing the ref by tagging Labor’s dividend imputation policy a ‘retirement tax’. It is not surprising they see this as a productive strategy since the same thing worked with their carbon tax scare campaign.
Political journalists self-identify as watchdogs for democracy who hold the powerful to account by shining a light on the political system. This position places them between opposing political parties much like an umpire or referee neutrally enforces the rules of the game by calling out infringements.
But what happens when a team is infringing and the umpire fails to blow their whistle? Football fans know the loudest boo is reserved for bad umpiring. The rules are sacred. When they are flouted, the game is not fair, the cheaters prosper and sometimes it can even feel like the opposition has an extra player.
If rule-breaking becomes a winning strategy, umpiring business-as-usual needs an urgent review. Even with the best of intentions, if umpires are emboldening rule infringements or even encouraging blatant cheating, something urgent must be done to bring civility back to the game.
There is much discussion of journalism in crisis. Technological disruption, the rise of independent and social media and unprofitable business models are often cited as the problems. There is less analysis of how journalists’ media routines might be contributing to their own harm.
One of the most common routine formats which is supposed to represent balanced umpiring for reporting of politics is what media critic Jay Rosen refers to as ‘he said, she said journalism’. This style, however, turns journalists into stenographers rather than critical analysts of politics and is akin to an umpire ignoring the holding-the-ball rule while protecting their own credibility through the alibi of quotation marks.
Politicians take advantage of this media routine. They have learned they will get away with tucking the ball under their arm and striding boldly through the goal posts unencumbered by the whistle. The Liberal’s tagging of Labor’s dividend imputation policy as a ‘retirement tax’ is such an example of them successfully playing the ref.
By any definition, it is demonstrably false to depict Labor’s dividend imputation policy as a tax. No doubt journalists can see this for themselves. However, they have backed themselves into a corner by quoting directly Liberal government spokespeople and advertising which uses the phrase ‘retirement tax’. This coverage convinces the public Labor is introducing a new tax, thereby representing a distortion of reality.
The words ‘retirement tax’ are now in the public lexicon. The fake tax becomes a thing which is basically impossible for Labor to get rid of. The voting public rely on news media to tell them about politics. When the umpire fails to do their job, there are consequences not only for the health of democracy, but for the health of the journalistic profession. Who will ever trust the ump again?
It is not like journalists haven’t been here before and seen the damage for themselves. The Labor government’s Carbon Price was not a tax. Yet, from the very first day it was announced, the name of the policy was interchangeable with Tony Abbott’s tag of ‘carbon tax’. Using The Australian as an example, from the day Labor released the Carbon Price policy on 27 September 2010, the newspaper has referred to the carbon tax 7,735 times, as compared with the Carbon Price 2,260 times.
To add insult to injury, Gillard’s ‘failure’ to win this policy argument was then framed as her responsibility. For example, Ross Fitzgerald writing in The Weekend Australian on 30 July 2011 said the carbon tax debate was negative for Gillard because of her ‘flawed political judgment and poor communication skills’. By blaming the players for their poor result, the umpire maintains their self-perception as a neutral arbitrator of the rules and fails to see how their own actions have influenced, sometimes decisively, the terms of the debate.
In 2017, former Prime Minister Tony Abbott’s chief of staff, Peta Credlin, admitted the Carbon Price was not a carbon tax. She confessed the coalition ‘used that label to stir up brutal retail politics’. The players knew they were cheating. Why not if cheaters prosper? But what is the role of the umpire in brutal retail politics? According to The Australian’s Chris Kenny, ‘Scare campaigns are to politics what tough defence is to footy – an unavoidable part of the contest if you want to win’. When the umpires put down the whistle and see clear-as-day infringements as just par for the course, it is no wonder footy supporters are walking away from the game.
There is no such thing as Labor’s ‘retirement tax’. The Liberals are playing the ref by using journalists to pervert truth and in turn legitimise their misrepresentation. The Guardian’s Katharine Murphy said on ABC’s Insiders that Labor is ‘facing a battle to explain’ their dividend imputation policy. Labor have explained their policy numerous times. Of course, it is up to journalists how they choose to frame such information. Murphy agrees that calling the policy a ‘retirement tax’ is clearly not an accurate description. Outlets who parrot this Liberal phrase are misrepresenting and constraining public debate about the policy, serving no one’s interests except the Liberals’.
Journalists are under no obligation to uncritically repeat and adopt false information from the Liberal government. Footy is a game, but politics is not. The public need journalists to blow the whistle in the interests of democracy. If they continue to fail to do this, they are forgetting the very reason they exist.
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andy56
Return to home pageThe current sycophantic utterances masquerading as journalism will continue to be the norm in Australia until the prevailing media concentration is broken into smaller blocks ensuring no single person or company dominates the industry!
I typed “Labor” into Google and the first suggestion that came up was “Labor’s retired tax.” So I clicked on it. The first article on top was “Stop Labor’s Retiree Tax” on the Liberal Party website.
Most of the article on the first page of the search results were negative towards Labor.
The scare campaign is working.
The LNP/MSM coalition doing what they do best.
We have to do better than them.
Worked for Abbott to call something a “carbon tax” and as Credlin admitted, “it wasnt a tax, of course”.
However, social media wasnt much of a force in 2013, and they got away with it.
Good article by VIctoria, calling out the mainstream media. But revelations are trickling out, Michael Kosiols 2014 SMH article most interesting giving TimWilsons background before he entered politics.
Morrison shamelessly backing in Tim Wilson on this, but revelations coming thick and fast about his conflict of interest not declared, as Chair of a Committee (against parliaments Standing Orders). Over his investment in Wilson Asset Management contacting Tim (cousin) at least 6 months ago, colluding with them to hold Parliamentary Inquiry meetings to coincide with Wilson Asset and others.
Now another group behind the campaign unmasked as Liberal Party stalwarts, opened a company for campaign purposes.
No doubt this is difficult for Labor, but they have to fight it tooth and nail. They need to keep repeating a simple message explaining the situation. A simple explanation that stays in peoples minds (never mind the confusing detail, to clog up a simple message)
Now trusts have been brought into the mix, one of Tims backers saying that using family trusts can get around the “retirement tax” (aka “cash handout from ATO of Company tax paid to the government so government ends up with zero tax” )
In a situation where both parties are not trustworthy, the truth is perceived to be somewhere in between so then the greatest liars have the advantage
The SMH has the headline “Labor will live to regret its unfair retirement tax policy” written by Tim Wilson’s cousin Geoff.
https://www.smh.com.au/national/labor-will-live-to-regret-its-unfair-retirement-tax-policy-20190117-p50rvn.html
The Financial Review says “Chris Bowen touts $200b tax hike buffer against global headwinds”
https://www.afr.com/news/economy/chris-bowen-touts-200b-tax-hike-buffer-against-global-headwinds-20190122-h1abj4
The only tax hike is the continuation of the 2% budget repair levy that Abbott introduced and the projected savings from their proposed changes is $26 billion over 4 years so I don’t know where the $200 billion figure comes from.
https://www.abc.net.au/news/2019-02-07/election-labor-coalition-liberal-policies-show-me-the-money/10442114?section=politics
Sigh, what a great big non-surprise this is –
https://www.smh.com.au/politics/federal/retiree-group-lobbying-against-labor-unmasked-as-liberal-party-and-trucking-industry-operation-20190205-p50vvo.html
LNP, the martian red weed of politics.
“…. the greatest liars have the advantage.”, says Judith
Wow, some assessment of the country….better start packing…..
Oz did no think the young Saudi girl was GOOD enough to be taken in….
The soccer player from Bahrain gets more concern; well he’s a sportsperson after all…?
At a shareholder presentation in November, Geoff Wilson said that “all you’ve got to do is change from a company structure to a trust structure” to avoid the impact of Labor’s policy.
Financial advisers will always find a way for their clients to avoid paying tax. Wage earners, on the other hand, have no such luxury. This country is being kept afloat by people who DON’T have financial advisers.
It is far more serious than what the right-wing press do. With very few exceptions, they all fail to really call out lying politicians. A driver will speed and run red lights when they do those things and suffer no penalty, so habits form (although most complain about how the police are “raising revenue” when they get caught???). Politicians are not called out for lies and so contiue to lie – and the failure to get called out is, in effect, an incentive to lie even more.
Even the allegedly mighty Leigh Sales failed to call out Frydenberg recently – he was arguing that Labor did nothing about the banks and the financial sector. That was a lie – Labor’s Future of FInancial Advice (“FOFA”) package was a significant reform that was vehemently opposed by the LNP (of course the financial sector lobbyists told them that’s what their supporters wanted) and when Abbott became PM was largely neutered or dismantled. Did Sales ask a single question about that? Well …. no she didn’t, although in fairness, no-one else in the media (apart from Crikey) mentioned this either. Has anyone asked the LNP shriekers to explain how they came up with their $200 billion number? Every politician lies about numbers where it helps their cause and the LNP are inveterate liars. The only exception I have seen thus far is David Speers – he does his homework; attacks politicians’ claims with facts and attacks calmly and without the boorish talking over the top of interviewees (yes, Sales, Trioli, Ferguson and many others, who show utter disrespect for their studio guests). Speer’s dismantling of the comments made by a true LNP under-performer (Stuart Roberts) about hollow claims that 1.25 million jobs will be “created by the Coaltion”, was masterful.
Wilson’s disgraceful acts as chair of a Senate committee that is an abject farce should be on the front pages, but barely gets a mention (except on the Shovel). Nobody bothers to mention the vicious campaign waged by the government against the East Timor bugging scandal whistleblowers. ASIC staff accepting gifts from bankers they are supposed to regulate was another scandal – that was mentioned once and then disappeared. Politicians need journalists to be incompetent because it makes their lives easier and boy, do our journalists deliver. We, the public need journalism of a much higher standard so that we can punish lying politicians. Of course, all politicians lie – but we should reward any lying politician by re-electing them?
Worse, the politicians lie because journalists don’t do their job. And the public fails because we believe the lies and baseless claims – we don’t call out te politicians or the journalists, so the bad behaviours of both are repeated.
I blame Labor, of course.
If the “carbon tax” was so easily proven to not be a tax, Labor failed to establish the lie.
They failed to counter the mineral “tax” attack by the poor ‘ole miners.
I know they could be keeping their powder dry for the election campaign but so far, I haven’t seen anything to suggest the retirement “tax” and the negative gearing reforms won’t end up on the same scrap heap of wasted reforms.
Just give us examples preferably delivered by someone with wit and a Keatingesque turn of phrase.
The monthly meeting of the Labor Election Strategy Committee and the Party’s PR agency is facing a question:
Question
Hypothetically, we have a self-funded retiree owning his own $2,000,000 house (which was his investment house for ten years before retirement) with a super fund of $5,000,000 in shares which earns $300,000 pa. Oh, and there’s some sort of a trust fund somewhere.
1. Discuss the hardships this little aussie battler would face if he had to pay normal tax under our scheme on the 300 grand.
2. How much government largesse did he receive for 10 years while renovating his investment property (now family home – the kids are set for life, eh?) and what sort of tax relief did he receive over 20 years in accumulating $5 mill so he wouldn’t be a “burden on society”
The meeting broke up in angry disarray when four members of the committee thought that, far from being hypothetical, the example applied directly to them.
Mary (in retirement) has $1 million in shares and therefore receives $20 000 dividend imputation. Government now down $20 000. Mary sells her shares to Jack who has a tax bill of $x but after buying shares (and rights to dividend imputation) now pays $20 000 less in tax. Where’s the gain for the government? Is there any political pain in this scenario?
No gain, no pain, NM.
I thought I was told lies, I even thought it was it April Fools Day, when I found out Tones was our PM; I was happy for one day when Mal got that job, by the time it was Scottie’s turn to take over I realised I better get used to it…now I fear it will Dutton soon….
I was flabbergasted when Tim Wilson became the Human Rights Commissioner…..now I just shake my head and take ‘a Bex and lie down’….
Thanks Victoria I have sent your excellent expose` to my Twitter followers for their info and hopeful retweet.
John Howard introduced the Franking freebies because Telstra shares were not producing much of a dividend after he fully privatized it.
Middle Class Welfare for Mum&Dad investors.
MN:
Firstly, if Mary is getting 20K dividend imputation, she should be getting around 60K in dividends. That is very unlikely with a $1m investment in shares. More likely $2m. Assume she is not a pensioner, otherwise no problem, as she is exempted.
If she is not a pensioner, she pays tax on her dividends, which means tax on at least 30K. She can offset this tax with the dividend imputation of only 20K. So no loss from Labor’s policy, because she was never getting that ATO refund anyway.
Further, if Mary sells all her shares, that will be a CGT event. If the CGT is a measly 200K (say) then 100K will be added to her income and she will need to pay tax on the amount above the threshold (including various offsets). In addition, the 2 million cash will now have to be invested in something like a fixed deposit, where it will earn a measly 40K interest annually, compared to the 60K she was getting previously, not counting the ATO offset. If she is not stupid, she will not sell all her shares and do this, because it will leave her worse off than the previous situation, even after losing the ATO offset.
Think of something else. Arithmetic is a powerful system when used properly. You can’t just cherry pick some figures in isolation. That is how the Wilson gang are doing it. Sadly, there are enough non-numerate people who fall for this kind of skulduggery.
MSM dont play fair,while Murdoch is Capt of the team.
1.
I guess that at least 80% of the voters
are not able to understand the number crunch. I am one.
2.
All MSM journalists are employees, they know who pays their wages.
3.
As for this dividend imputation policy, I fo not understand it and NO I do not think Labor have explained it well or often enough.
4.
Thank goodness for the contributions by the stalwart crew on AIMN
Queen Vikkie, “the thug” is one of my bookmarks. Always has something interesting to say. I like people who are open, frank and ‘wear their hearts on their sleeves’. Like Kaye Lee and others who write and comment here. Cheers
They’re at it again! Remember how the LNP wingnuts lied about what the ETS actually was, and invented “the carbon tax” myth?
Here’s a rare sober moment from Peta Credlin admitting how the whole LNP strategy was based on a typically tory LIE.
https://www.buzzfeed.com/markdistefano/whats-the-point-of-australian-politics?fb_comment_id=1534587789904302_1535533329809748&comment_id=1535533329809748&utm_term=.swaBr85EV9#.otXDAzl579
@whatever: We held Telstra shares soon after the reduced allocation for Australian taxpayers in favour of foreign owned multinational banks, that held the shares until the market rose to about $9.00 then sold out, quick smart, reaping a huge profit and leaving Telstra shares languishing about $2.00 ever since. Since then, political incompetence and interference has generated huge profits for the management but poor services for the Australian people, with the Mad Monk installing a third world Internet when the original ALP proposal was a first world offering. Well done LIarbrals! Yes, we have cleared Telstra from our portfolio.
totarum, 20,000 nab shares at say $27 equates to $540,000. Based on current dividend streams, thats $39,000 plus frankin credits, $16,971. Total of $55,971. Frankin credits are 30% of income.
15,000 nabs equates to $405,000. Thats $29,700 plus frankin credits of $12,728. Total income of $42,428. Frankin credits account for 30% of income.
10,000 nabs equates to $270,000. Thats $19800 plus frankin credits of $8485. Total income of $28,285. Frankin credits account for 30% of income.
For someone on a SMSF, $28,285 ( less fees) , losing 1/3rd of your income is NOT TRIVIAL I survive because i intend to live mainly overseas. This is where the problem is, small scale SMSF. If your going to cut my retirement income by 30%, you better be assured i will be trying my darnest to leverage the pension alot more.
Unfortunately, everyone lumps small amd large smsf together without any nuance. I learned to count too.
totaram, you miss my point completely. I was advancing a hypothetical about dividend imputation, supposed government savings and the possible reality. A consideration of the POLICY. It was NOT about the arithmetic. Thus figures used are neither here nor there re the main point. There for concrete thinkers. (Although I would dispute some of the assumptions you make because they are courageous..)
I’ll put it another way. Bowen says again and again – what was sustainable X years ago in terms of budget affordability is no longer the case. Thus he needs to reduce government outlays – make savings. His political weapon of choice is the curtailment of dividend imputation – but only if it leads to cash in the accounts of particular individuals. He even puts a figure on that amount – a saving of Y dollars.
My point is that Bowen’s model is only valid because he assumes that an individual won’t change their behaviour. If Mary above sells her shares because she loses her dividend imputation – this does NOT necessarily lead to a government saving (the extinguishing of the franking credit) IF her shares (and dividend imputation) are bought by Jack who then uses that dividend imputation to lower his tax obligations. Hence Bowen’s hoped for outcome might be a complete illusion and little or no savings are made
Perhaps I should have used algebra more liberally. My fault.
Sorry arithmetists, the hypotheticals dont help. In fact they muddy the waters. I contend Labor should go simple: “people who don’t pay tax are not entitled to a cash gift from the tax office”. Perhaps they need to name names of those wealthy people who have huge share/investment portfolios but reduce their taxable incomes below the tax-free threshold, The same way companies which pay no tax are named. OK, I know that would be seen as a gross invasion of privacy but the greedy need to be called out.
andy56: if you decided to have a “small scale SMSF” you were very badly advised. Anyone with a total super balance of $270K who holds it in a SMSF is asking for trouble. Having the entire amount in NAB shares is even more stupid. Let’s be sensible and try to avoid inventing strange hypothetical situations. If you are planning to live overseas, I strongly suggest rolling your SMSF super into a retail/industry fund if that is possible. An allocated pension from that will give you money wherever you are, but depending on local tax laws you may have to pay tax there. Oh, BTW if you are living overseas, I doubt if you will get the franking credits, so you do need to go back and check. It’s easy to INVENT extreme situations in which someone will be disadvantaged. In reality they would be few and far between. No matter what changes are made there will ALWAYS be someone who loses out.
MN: I haven’t missed your point. As pointed out by me, Mary above will NOT sell her shares unless she is particularly stupid. You have invented a situation in which the government does not gain, but it assumes people are stupid. Bowen’s assumption “might” be an illusion in one case of stupid Mary, but by and large, Bowen will get his saving. Remember, one stupid person doesn’t imply thousands of them. This is the point. No policy change can be so wonderful that there will be no exceptions. The world is already too complex. But just because you can invent such a situation, doesn’t mean it will be the norm or even the statistical majority.
RC29: How Labor decides to spin this is not something I would advise them on. In particular, I don’t think Bowen is good at spinning this. Just telling people “they can vote against us” is not good politics in my view.
On this blog, we are not simply spreading Labor’s message. We are doing some analysis of it. I am simply trying to say that the people complaining about this policy HAVE to be very well off. The stories of people like andy56 just don’t stack up in most cases, and even if they do, they will be a very small minority. That is what arithmetic tells us, and as pointed out by some above, it helps the non-numerate get a better handle on what is going on. We can’t go through our political life being bamboozled by politicians because we can’t do simple arithmetic. It’s bad enough with the complexities of power generation and distribution and climate change, where the issues are much more subtle, so the obfuscaters have a field day. And I have mentioned the 3-sector financial identity.
Don’t worry about muddying the waters. The opposition and their propagandists are already hard work doing just that. I think we do need to demolish their spin wherever possible.
andy56: Here is what the ATO says:
If you are a non-resident of Australia, the franked amount of dividends you are paid or credited are exempt from Australian income and withholding taxes. The unfranked amount will be subject to withholding tax. However, you are not entitled to any franking tax offset for franked dividends. You cannot use any franking credit attached to franked dividends to reduce the amount of tax payable on other Australian income and you cannot get a refund of the franking credit. You should not include the amount of any franked dividend or any franking credit on your Australian tax return.
https://www.ato.gov.au/Forms/You-and-your-shares-2013-14/?page=14
So your example of losing franking credits while living overseas was entirely made-up. You would not get them at all.
A home-owning couple can hold up to $848,000 in assets (aside from the family home) and have an income of $3,066.80 a fortnight before they lose their part Age Pension entitlement. Anyone receiving a part pension is exempt.
Let’s get real here. The few people this will affect adversely can afford it.
Giant donation raising con job by the LNP –
https://www.smh.com.au/politics/federal/this-is-a-sham-chaotic-scenes-as-man-ejected-from-tim-wilson-s-franking-credits-inquiry-20190208-p50wil.html
Kelly and Wilson were revolting.
Lala land visit by the Red Bishop –
https://www.smh.com.au/politics/federal/julie-bishop-declares-the-coalition-can-win-and-she-intends-to-stay-20190208-p50wib.html
About the only way the LNP will win is if they bring down martial law.
Re:
Absolutely true. And as long as you receive a part-pension you qualify for a cash refund from the government from excess franking credits – which is apparently still sustainable even in these tough times. As for the value of the family home – how valuable do you want it to be before it becomes an asset? $X Million, 2$X – what about 8 or 10 $X million – the truth is it matters not – because there’s no stated limit.
Perhaps it’s this (non asset) family home that’s contributing to the distortion of the market and keeping our kids and grandkids from owning their first home?
As for (supposedly) ‘stupid Mary’ and (why she’s not) I’ll leave for another time. So many questionable assumptions.
Said long ago, that this ‘well thought through policy’ – wasn’t. Still think Labor will win (and it ought to) but there will be apolitical price to pay.
Totaram, you a so smug, no? Giving gratuitous advice that isnt solicited. You think i am so stupid to put all my details here? You know nothing about me so stop trying to dictate the conversation around to what you want. If i followed your advice, i would be living on $15,000 a year. F U.
It just so happens i agree with labor policy with one caveat. It should be grandfathered like NG. I have already past the point of turning my financial strategies. I planned with the current rules. Sure i have some options, like return to work. And then, when do i retire, when im 75?
I suggest you also show some compassion rather than hard and fast ideological point scoring. Yes winners and losers, i get that, but why is it the big end always still comes out on top and us smaller guys get wacked?
At the end of the day, this policy is another in a long line of skirting the elephant in the room.
Retirement income.
What is a reasonable income in retirement? Unfortunately its been hijacked by all concerned because its an easy feed. Is someone getting an extra $10,000 equally as greedy as someone getting an extra mil? How much does the government depend on its gouge? Private super funds have to be seen to be doing something to collect its cut too. How does the pension tie into all this?
This is the elephant and this policy just skirts around.