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Labor bows to Coalition pressure to stop investment tax grab

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Media Release Senator Mathias Cormann Shadow Assistant Treasurer Shadow Minister for Financial Services and Superannuation

12/0620/PK 20 June 2012

Labor bows to Coalition pressure to stop investment tax grab

Just six weeks after the Budget was handed down Labor has bowed to pressure from the Coalition and withdrawn its proposal to double final withholding tax on Managed Investment Trusts.

The Coalition has consistently said that this latest in a long series of ad hoc Labor Party tax grabs was counter-productive, was placing at risk billions of dollars in investment in critical infrastructure and was yet again increasing Australia's sovereign risk profile.

We welcome Labor’s decision to back down on this tax increase.

Labor's constant chopping and changing of our taxation arrangements, driven by a desperate need for more cash to feed its addiction to wasteful spending, continues to reduce the confidence of international investors in the stability and predictability of our tax system.

Recent research conducted by Allen Consulting Group showed that a $1 billion drop in investment as a result of the increased tax would raise $40 million less in revenue from the tax increase in 2015/16 than the $75 million predicted by the government.

The Allen Consulting Group also found that by 2015/16 the increased tax would reduce GDP by $580 million and cost more than 4,600 jobs a year.

There is a better way.

The Coalition is committed to lower taxes to help attract investment in critical infrastructure, develop our position as a regional financial services hub and strengthen our economy.

That's why we called on Labor to scrap its misguided and ill thought out push to double the tax on Managed Investment Trusts.

Our focus should be on encouraging more investment through internationally competitive taxation arrangements so we can grow our economy more strongly.

The Coalition understands that stronger economic growth will deliver increased revenue to government without the need for all these new and increased Labor taxes.

In contrast, Labor’s many new or increased taxes have already undermined our international competitiveness and reduced our economic growth potential in the future.

MEDIA CONTACT: Senator Cormann 0411 874 546