Beyond dividend imputation: better ways to improve the budget

by Danielle Wood

Published by Australian Shareholders’ Association June 2018 EQUITY magazine

Federal Labor’s dividend imputation policy is a fair way to help improve the budget and wind back the growing intergenerational transfers built into our tax system over the past two decades. But there is a better way, as Grattan Institute’s Budget Policy Program Director Danielle Wood writes in the Australian Shareholders’ Association magazine, Equity. More substantial reforms – such as taxing superannuation earnings in pension phase at 15 per cent (distributions from super accounts would remain tax free) and winding back the Seniors and Pensioners Tax Offset – would achieve the same benefits but without some of the investment-distorting effects of Labor’s policy. Taxing super earnings would bring older people into the tax net and enable Australia to stop the piecemeal tinkering to retirement incomes policy we have seen from both sides of politics in recent years. Retirement income debates may be heated, but surely more policy certainty, a better economy, and less intergenerational inequality are things we can all get behind.