Alan Kohler is railing against dividend imputation:
It’s hard to imagine anything more bittersweet for a nation than franked dividends.
They are pouring more than $50 billion a year of beautiful, largely tax-free income into the hands of the deserving well-off and helping them lead comfortable retirements without relying on the government pension.
In fact, according to tax office statistics, the ATO is actually sending out billions in cash franking credit refunds to super funds in pension phase: in 2011 it was $2.5 billion, but it would be much more now.
Apart from the fact that it costs the Treasury a fortune, the nation’s investors have become obsessed with harvesting dividends and the companies with supplying them.
It costs Treasury nothing to return money it has no claim on to taxpayers. Unless Alan Kohler is really arguing for the return to double taxation on dividends.
There has been a lot of talk about increased dividends this year – as if it was a bad thing. From a corporate governance perspective, however, reducing the amount of free cash flow within large corporations is a good thing.
For Kohler the end game is this:
How about this for a positive idea: Australia can be entrepreneurial. The only way any economy grows is if the returns from corporate investment are greater than those from being passive. The system needs to favour entrepreneurs over landlords, risk-takers over rent-collectors.
Okay – but why argue for increased taxation? If you want more entrepreneurship – by that I think he means more small business – then lower taxes, cut red tape, cut green tape, reduce the size and scope of government.