SKY NEWS AM AGENDA
MONDAY, 26 MARCH 2018
SUBJECTS: Dividend imputation reform; Research showing Australian firms that pay less tax create fewer jobs.
KIERAN GILBERT: Welcome back to the program, with me now is Shadow Assistant Treasurer, Andrew Leigh. Thanks so much for your time. You don't go into polls too much but in terms of Labor's policy on the dividend credit, scrapping that refund, 50 per cent are opposed to it but it hasn't really shown up in the primary votes, is that surprising?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: You're right, Kieran. We didn't set the standard of 30 Newspolls, that's the Prime Minister's standard but he's now just one Newspoll away from failing to meet it. And of course the reason for that is clear in the way the economy is performing. You've got an economy which has seen corporate profits grow 32 per cent and wages grow just 4 per cent. So with corporate profits growing eight times as fast as wages what does Malcolm Turnbull want to do? Give big business a company tax cut and cut penalty rates.
GILBERT: You've done some analysis on that and we'll get to that in a moment, but typically on this dividend credit refund which Labor is going to scrap when it get to the point where it actually gets to the point of being a cash refund. Fifty per cent are opposed to the idea, you've got a bit of work to do convincing people that this is the right cause of action.
LEIGH: The Tax Office shouldn't be an ATM for multimillionaires. This is a unique Australian tax loophole. One which was put in place in 2000, and that doesn't sit with the spirit of dividend imputation which is to avoid double taxation. But the notion that Paul Keating had in 1987 was never that the tax office would sit there writing cheques for people with many millions of dollars.
GILBERT: When will we get the carve out for the pensioners then? That is the expectation, when will you carve out the 14,000 full-time pensioners and more than 200,000 part pensioners who could be caught up in this. Because they're not all millionaires as you conceded before.
LEIGH: But 90 per cent of the revenue from self-managed super funds is coming from the top 10 per cent, Kieran. We've always been the party standing up for pensioners. We stood up against Tony Abbott's attempt to index the pension to prices rather than wages.
GILBERT: So when will you do the carve outs? Sooner rather than later?
LEIGH: Kieran, we have a strong track record of standing up for pensioners. Delivering the biggest pension increase in Australian history so we're still fighting the Abbott/Turnbull Government on their attempt to cut the energy supplement, to make it harder for pensioners to go overseas, to make it harder -
GILBERT: You're not going to slap them with this is the point?
LEIGH: We are the party which has consistently fought for pensioners and we will consistently do that.
GILBERT: This week? Will we have it before Easter? Some sort of confirmation that pensioners won't be caught up in this?
LEIGH: Kieran, no pensioner watching your show should be in any doubt which party has always stood up for their interests and it's the Labor Party every single time.
GILBERT: Do you look at capping payments? Is that the way you can inoculate a pensioner who might receive $1,000 or $500 in a refund? Cap it at say $5,000 is that workable?
LEIGH: Pensioners watching this morning will know that their returns have fallen but there hasn't been any adjustment to the deeming rates. They'll know that the Abbott/Turnbull Government has tried to take away supplement after supplement. They'll know it has been Labor that has been consistently in the corner of pensioners and that'll be true in the future.
GILBERT: When it comes to company tax cuts, if the Government successfully gets it through this week, in a political sense you can go to the election saying you are going to revoke those company tax cuts, is it viable in terms of the mechanics of that? No OECD has never done that, saying we're going to lift the corporate tax rate in recent times?
LEIGH: Kieran, for all the urgency that surrounds this we need to be clear about the timing. This is an intent to cut the company tax rate for 25 per cent from the 1st of July 2026, in more than eight years’ time. We'll probably have three elections before then.
GILBERT: Thee are cuts between now and then, staged cuts?
LEIGH: And indeed we've supported the cuts to small businesses. But we've said that a big business company tax cut simply isn't affordable. And Kieran, you mentioned before the new research that I've got out - that shows very clearly that when you look at companies’ effective tax rates, firms with the lower effective tax rate actually seems to be shedding jobs while the companies with the higher effective tax rate are net job creators.
GILBERT: But is that because at that time companies might be making losses? Isn’t that normally the time that you pay lower company tax?
LEIGH: That’s a great question and that’s why I restricted the sample to look at profitable firms. So we’re just comparing profitable firms claiming different levels of refunds and deductions. Those with an effective tax rate below 25 per cent are actually shedding jobs. Those with an effective tax rate above 25 per cent are creating jobs.
GILBERT: So the more tax you pay as a company, a big company, the more jobs you create as well?
LEIGH: That’s the regularity in the data and indeed that stands up with research that’s been done in the United States. It seems to be quite a clear pattern that the companies which are paying a very low effective rate of tax are actually shedding jobs. Those companies paying a rate of tax closer to the statutory rate are job creators.
GILBERT: That’s interesting analysis, but in terms of that question that we discussed earlier, you’ve supported company tax cuts for up to a $2 million turnover. If it is increased and possibly right across the board, how to do revoke those that have already been delivered? Is that feasible?
LEIGH: Kieran, I think we’re a long way away from that. As I said, we’re talking about a reform that is yet to pass the Parliament and doesn’t take effect until 2026.
GILBERT: But it’s not really, because $50 million turnover companies have received the tax cut, so already we know that that’s not a hypothetical. You’d have to revoke that for businesses between the $2 million turnover over $50 million. So that’s not hypothetical, you’d have to do that.
LEIGH: And in that range, we’ve said very clearly that we’d announce our position closer to the election based on looking at the fiscal numbers. And that’s what you’ve got to do as an Opposition facing unprecedented levels of debt in this country.
GILBERT: Andrew Leigh, appreciate your time as always.
LEIGH: Thanks Kieran.
Authorised by Noah Carroll ALP Canberra