Treasurer Jim Chalmers can take a fair amount of credit for realising the importance of fiscal credibility well beforeThe new British government triggered a vicious sell-off in both the pound and UK government bonds, which are known as gilts, when it unveiled a surprise and unfunded tax cut, at a time when the Bank of England is hiking interest rates to subdue soaring inflation.
And Chalmers’ message has been fully endorsed by Reserve Bank boss Phil Lowe, who has pointed to the “significant issue” that Australia is running large budget deficits at a time when unemployment has fallen to a 50-year low and commodity prices are booming.But Chalmers’ adroitness in avoiding a head-on conflict with the Reserve Bank makes his latest misstep on franked dividends all the more disappointing.
Now, it’s not unreasonable for Chalmers to restrict companies from raising fresh capital for the sole purpose of paying franked dividends.Given it’s been almost six years since the measure was first unveiled – then failed to materialise – it’s logical for investors to have assumed Canberra had quietly ditched the scheme.
So, from Chalmers’ point of view, it’s a poor trade-off. He’s breaching the widely accepted principle that tax changes aren’t retrospective, and hitting investor confidence in the process, for what is a minuscule improvement in the budget bottom line. It’s clearly not in Chalmers’ interest to get involved in a highly inflammatory battle over franking credits, which could rattle investor confidence.for super funds and institutional investors to lift their investment spending in areas such as affordable accommodation and renewable energy.
DUMP INLAND RAIL N DUMP TAX CUT Oz $$ is going to sink n gov needs the cash to defend the$$ JEChalmers
AND what is next Jim? What other revenue can you find to tax from events some 6 years back? The moral of the story is you can never trust Labor on tax irrespective of election promises!
The turgidity of that writing...renders it useless.