by Anthony Galloway.
Labor is facing a revolt from its own voters over its policy to axe refundable tax credits for self-funded retirees, with some older Victorians vowing to vote for the Coalition for the first time.
Retirees with self-managed super funds stand to lose thousands of dollars every year from Labor’s move to end franking credits, as the Coalition looks to make it a key issue at this year’s federal election.
Albion resident Jim Samson, 75, plans to retire next year after working for 50 years as a nurse.
A lifelong Labor voter, Mr Samson said he stood to lose about $13,000 a year in franking credits — about a third of his post-retirement income.
“I have voted Labor my whole life, that will not be happening this year,” Mr Samson said.
“There seems to be this perception that every one who will be affected is rich. But I’m not rich, I’m still working at 75 and earn $74,000 a year.”
Mr Samson said Labor’s policy was unfair as it would not affect most retail and industry super funds, which could pool their members’ contributions together.
The policy will save the Budget about $56 billion over a decade and Labor has vowed to put the money into schools and hospitals.
Retired Emerald couple Alan and Katrina Foley, aged 68 and 63, would lose about $15,000 a year under Labor’s policy.
Ms Foley, who has voted for Labor in the past, said the policy was punishing “middle-class retirees, not the high wealth individual”.
“We lead a simple life now and it’s about to be a lot more simple,” Ms Foley said.
Hampton resident Darrell Mackenzie, 75, said he would lose about $14,000 in franking credits and be forced to cut his private health insurance and go on the aged pension.
Geoff Stevens, 76, a Liberal voter, said he and his wife Setsuko would lose $16,546 a year, a quarter of his income.
“I believe it’s a really unfair treatment of self-managed superannuation funds. It should be all funding credits not returned or all returned,” Mr Stevens said.
Labor has called for Victorian Liberal MP Tim Wilson to step down as chairman of a parliamentary inquiry investigating its policy. Mr Wilson, the member for Goldstein, said he had heard from many people who have voted Labor their whole life “and now feel betrayed by their own party”.
The Liberal MP has been under fire from Labor for including a Liberal petition against the policy on a website promoting the parliamentary inquiry into the policy.
Opposition treasury spokesman Chris Bowen said 96 per cent of Australians didn’t receive the credits and “all Australians will benefit from better schools and hospitals”. “Australians are yearning for a party that is upfront about its decisions, principled on policy, makes the big calls and sticks to them,” he said.
LET’S BE FRANK
■ Franking credits allow Australian companies to pass on tax paid at the company level to shareholders, so that tax is not paid twice on Australian corporate profits.
How do self-funded retirees receive cash refunds?
■ When shareholders don’t pay any tax they can claim a cash refund for unused credits from the Australian Taxation Office.
What is Labor’s policy?
■ To stop giving franking credits to self-funded retirees who pay no or little tax, but to spare more than 300,000 pensioners from the policy.
What do the people affected say?
■ They planned for their retirement by factoring in franking credits, and it is unfair to change the policy.
How much money will this save the Budget?
■ Labor says it will save about $56 billion over a decade and it will spend this money on schools and hospitals.