Coalition Relying on Flawed Data to Oppose Withholding Tax Changes
The Coalition have been caught out relying on deeply flawed modelling in their opposition to the Government's proposed changes to managed investment trust withholding tax, said Assistant Treasurer David Bradbury.
Senior Coalition frontbenchers Andrew Robb, Mathias Cormann and Bob Baldwin have been quoting from an Allen Consulting Group report that Treasury has found to be 'deeply flawed'.
Treasury analysis of the report found the modelling calculated an increase in the company tax rate across all sectors of the economy rather than the proposed withholding tax rate of 15 per cent for managed investment trusts.
"The Coalition have been caught out hiding behind deeply flawed analysis commissioned by vested interests to try and distract attention away from their shameful record on withholding tax rates for managed investment trusts," said Mr Bradbury.
"Under the former Howard Government the rate of withholding tax for managed investment trusts was 30 per cent - double the rate proposed in the Budget.
"It was this Labor Government that slashed the Coalition's high rate of taxation to help encourage investment.
"The Coalition have made it clear that if they had their way, the 30 per cent withholding tax rate would never have been reduced in the first place and they would have rolled the shutters down on foreign investment."
When the withholding tax was first reduced by the Labor Government, Liberal MPs lined up to oppose the move:
"It does not appear that this rate [30 per cent] of withholding tax was necessarily a barrier for investment."
(Michael Keenan MP, House of Representatives, 18 June 2008)
"The 15 per cent rate that is proposed in the Bill currently before the Parliament is half the rate it was when Tony Abbott and Joe Hockey were last in Government.
"It still ensures that Australia has a rate that is equal to or better than most comparable nations and is in line with the Henry Review's recommendations on location specific rents.
"This measure will ensure that we remain attractive as a destination for investment and that we deliver a fair return for taxpayers.
The Liberals made it very clear previously that they did not want a rate below 15 per cent.
"I do not see a reason for going below 15 per cent."
(Andrew Laming MP, House of Representatives, 18 June 2008)
"If the Coalition are now genuinely opposed to the 15 per cent withholding tax rate then they should commit to reversing it in office and come clean about which payments and frontline services they will cut to pay for it."
25 June 2012