Labor leadership candidate Anthony Albanese has admitted the party's franking dividends policy would have hit people who aren't wealthy.
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The policy is now in doubt after Mr Albanese linked the plan to scrap tax refunds for some shareholders to the party's election drubbing.
Swings against Labor on Saturday were more significant in seats with a higher proportion of older Australians, after the coalition framed the reforms as a "retiree tax".
Mr Albanese, who has thrown his hat in the ring for the party's leadership, says the fact the plan was going to hit the hip pocket made it a difficult sell.
"Some of those, of course, weren't very wealthy people," he told Adelaide's 5AA radio on Monday.
"They were people for whom a small cheque was what they paid their rates with or their car rego, or other essentials in life when it came in, so that clearly had an impact for us."
But he believes the tax measure must be dealt with at some stage, given it's costing the federal budget more than $5 billion a year.
"Clearly those issues are going to have to be looked at by the government itself in my view, down the track."
Victorian Labor MP Maria Vamvakinou says it's clear many people didn't vote for her party because they didn't want the change.
Labor must consider older Australians in the "middle group" who can't afford to lose their retirement savings, she believes.
"We need to not only accept it is real and understand them, but we need to find a way to address it," she said.
Labor's proposal to ditch cash refunds for "excess" franking credits would have affected about eight per cent of Australians.
The credits are given to those whose share dividends have already been subjected to company tax, and can be used to reduce an individual's basic income tax liability, so they aren't taxed twice for the funds.
The credits can also be paid as a cash refund when someone's total credits exceed the tax they owe.
Labor MP Joel Fitzgibbon believes his side left itself open to a "scare campaign", not just on the franking credits issue but on mining and the prospect of an inheritance tax.
The party is examining all of its policies and campaign strategies after losing to the coalition.
Australian Associated Press
