subscribe to our newsletter sign up

‘It’s important to see what Labor are promising’: Stephen Koukoulas

magnifying glass, pay attention,Labor’s “adventurous” budget alternative

Investors would do well to pay attention to Labor’s “adventurous” budget alternative, especially given the pre-election timing, a high-profile economist has said.

Labor’s proposals to rein in the use of cash refunds for excess dividend imputation credits and limit negative gearing to new properties could trigger significant changes to Australians’ investment decisions, economist and managing director of Market Economics Stephen Koukoulas has said.

Speaking to Nest Egg, he argued the proposed changes to franking credit policies could see a shift away from “lazy” asset allocation decisions.

“I think it actually does change the asset allocation decisions,” Mr Koukoulas said.

“Two of the really big parts of how people invested their money for the last 15 plus years will change.”

The purchasing of established properties as an investment property will lose its sheen, as will the “lazy option of buying 100 per cent fully franked high yield stocks”.

“It’s a pre-election budget, and that's clear … It is important to see what Labor are promising, what they're offering,” Mr Koukoulas said.

“For an opposition, they're actually being quite adventurous in what they're promising.”

‘The big reforms over history … are really difficult’

These reforms, pitched as a means of helping first home buyers into the market while increasing the number of dwellings, and as a fair redistribution of the tax burden, will not be passed without a fight, Mr Koukoulas added.

“The big reforms over history and the ones to spring to mind are the GST introduction from the Howard campaign. These sorts of things are really difficult. They're making people pay more tax on goods and services, as was the case with the GST,” he said.

“These are revenue raising measures so, by definition, there's got to be great revenue to the government that's not going to be in the pockets of other people. That's why there's that resistance.”

‘It’s important to see what Labor are promising’: Stephen Koukoulas
magnifying glass, pay attention,Labor’s “adventurous” budget alternative
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Anonymous - Why does this get all the media attention when in reality it affects very few and the charges are minimal? How about reporting on all the ISA TPD.......
Anonymous - This got to be the smartest comment this century ?!....
nan - So what do you do if you are being ripped of and then can't afford the body corporate fees....
MarkL - The banks may not charge dead people any more ........... but they won't charge them any less either!....