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Coalition chasing Labor's coat tails on Labor's Asian funds management hub policy.



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Chris Bowen MP Shadow Assistant Treasurer Shadow Minister for Revenue & Competition Policy Federal Member for Prospect

27 September 2007

COALITION CHASING LABOR’S COAT TAILS ON LABOR’S ASIAN FUNDS MANAGEMENT HUB POLICY

Today's reports that the Coalition is looking at business tax reform of Australia’s managed funds represents a major policy backflip for the Federal Government.

In May this year, as soon as Kevin Rudd had announced Labor’s plan to secure Australia's place as a financial services hub for the Asia-Pacific by halving the withholding tax rate to 15 per cent on non-dividend income, the Treasurer was deriding Labor’s plan as “cutting tax for foreigners”.*

Now the government is pursuing Labor's agenda - the 15 per cent withholding tax rate - through tax treaties with other countries.

“On the eve of a federal election the government is playing catch up on the agenda Labor has laid out for facilitating the growth of the Australian managed funds sector,” Labor’s Shadow Assistant Treasurer, Chris Bowen said.

“The existing tax regime for Australia’s managed funds is outdated and extremely complex.

On the 29th August, National Australia Bank Group CEO, Mr John Stewart reiterated these concerns:

'The rate and complexity of our withholding tax regime is a significant impediment for managed funds wanting to attract non-resident investors from offshore.

'For Australia to be truly a funds manager to Asia, we need a withholding tax regime that is globally competitive and removes the need for complex administration.’

“Labor’s plan to halve the withholding tax rate and overhaul the moribund Division 6C of the Tax Act will bring Australia into line with international best practice while removing unnecessary complexity and a high administrative burden from our managed investment

funds,” Mr Bowen said.

“The feedback Labor has received is that the Coalition was deeply concerned about the warm reception given to Labor's plan for the managed investment sector.

Today’s reports also mention that the government is pursuing bilateral tax treaties as opposed to cutting the withholding tax rate across the board.

“Tax treaties take a long time to negotiate and are a very inefficient way of reducing withholding tax by stealth,” Mr Bowen said.

“If the government was serious about Australia’s managed funds they would simply adopt Labor's policy in a bipartisan manner.”

* - Transcript of Press Conference, Treasurer, Commonwealth of Australia, 11th May 2007

Media Contact - James Cullen 9726-4100/0409 719 879