Mar 15, 2018

Refundability distorts more than just the tax debate

With dividend imputation in the spotlight courtesy of Labor's refundability policy, some are pointing out the perverse consequences of the distortion introduced by the Howard government.

Glenn Dyer and Bernard Keane

Crikey business and media commentator / Politics editor

As the nation's newspapers -- read almost exclusively by old people -- go the full-court press on Labor over its reversal of the Howard-era dividend imputation refund, and that hitherto-undiscovered species, the wealthy shareholder retiree who insists "I've always voted Labor, but no more!" takes the media spotlight, what about the implications for the efficiency of our savings pool?

We've been banging on about the efficiency, or lack thereof, of our colossal national savings pool for some time. Back in 2000 -- when Howard and Costello, in an effort to shore up their then-ailing political prospects by loading taxpayer money into a cannon and firing it at their political base, introduced refundability for dividend imputation -- the super pool was around $400 billion. The latest figures from the ABS shows it's now $2.65 trillion. It's the fourth largest pool of savings in the world.

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