Labor’s franking changes for capital raising purposes will damage investment levels in Australia.
The proposal is bad for small and medium business, bad for entrepreneurs and bad for investors.
Companies will be forced to take on more debt, investors will have fewer franked dividends and corporate income tax collections will be lower.
After an extended Inquiry by the Senate Economics Committee, the major parties agree that Labor’s franking reforms should be put to death. Even the Government’s own report admits the changes are bad.
The evidence presented to the Inquiry was overwhelming. It is clear that the changes will destroy the ability of a company to pay a franked dividend when a capital raising has been undertaken.
In other words, any company raising capital in Australia may find it impossible to pay a franked dividend under the proposed test in the legislation.
There is no case to abolish dividend imputation because it promotes investment and the payment of corporate tax in Australia.
Treasury gave clear evidence the bill is trying to solve a problem which does not exist.
The only reason Labor is pursuing the policy is to raise revenue to pay for its new spending. However the costing underpinning this policy is based on ancient 2016 data and is completely unreliable.
Labor promised not to touch the scheme before the last election.
Yet their broken promise should be rejected on the basis of the evidence to the Inquiry, not on the political undertaking.
The Senate should now reject the Bill.
[Ends]
