This article is more than 1 year old

This article is more than 1 year old

A new analysis of Labor’s tax policies says the proposed overhaul of franking credits, changes to negative gearing, trusts and capital gains tax if Bill Shorten wins the election on 18 May will have a negligible impact on the bottom 50% of households in Australia measured by income and wealth.

While the Morrison government has played up the negative impact of revenue measures, particularly franking credits, on self-funded retirees with modest incomes, the distributional analysis of Labor’s tax measures by the Australian National University’s Centre for Social Research and Methods says that’s largely bunkum.

“Franking credits benefit households in the top 20% of income and wealth distribution considerably more than other households,” the analysis says. “While these households often have low taxable incomes, they tend to have large wealth balances or be in households with high incomes, even when the individual affected has a low income.”

The ANU academics, led by economic and social researcher Ben Phillips, modelled Labor’s changes to dividend imputation, negative gearing and capital gains tax, the reinstatement of the budget levy, the low and middle-income tax offset, new personal income tax rates and thresholds, and the taxation of trusts.

The overall impact of the proposed changes was highly progressive, “with virtually no impact for households in the bottom 40% of the income distribution and the largest increase for those in the top 10%”.

“In raw dollar terms, the top 20% account for around 70% of the fiscal impact with a loss of disposable income of around $17bn out of around $25bn in increased revenue under Labor.”

The ANU analysis says the top income decile will see an average loss of disposable income of $11,877 per year under Labor compared with the 2019 budget handed down by the Morrison government just prior to the election – which compares to reduction in income for the bottom five deciles of below 1%.

On franking credits, the analysis says the largest impact in dollar terms and as a percentage of disposable income of Labor’s policy falls on the top 10%.

The top 10% would, on average, pay $2,641 a year, or 1.1% of disposable income, if Labor wins and franking credits are removed. It says there is “virtually no impact” on low income groups in the bottom half of the income distribution. It says 600,000 households are negatively affected by the removal of franking credits.

The study also indicates Labor will have room to move fiscally to increase the Newstart allowance by $75 per week for singles, at a cost of around $3bn per year.

The new ANU analysis comes as the shadow treasurer, Chris Bowen, accused “vested interests” of attempting to influence the election outcome, taking aim at the Real Estate Institute of Australia for campaigning against proposed negative gearing and capital gains tax changes.

REIA has boasted that its campaign, assisted by its network of real estate agents, has reached nearly 8 million Australians.

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“This is part of a concerted effort by a select group of property interest groups to decide an election outcome and Australians should be alive to it,” Bowen said. “The REIA’s irresponsible claims are just downright lies.

“Labor’s housing affordability reforms will our first home buyers on a level playing field with property investors and importantly, give renters saving for their first home a chance.”

In a letter sent to tenants, REIA warns that “rents will go up” under Labor’s policy.

“Because you’re currently renting, it might be tempting to dismiss the latest political battle over whether negative gearing should be abolished. You might even see it as a good thing if house prices go down, but rents will rise”.