Scott Morrison wants Labor to listen to pensioners and retirees about their plan to end cash handouts for share investors who pay no tax.
Labor will axe the dividend imputation scheme if it wins government, although about 300,000 pensioners who use the scheme will be exempt.
The scheme transfers tax revenue from regular taxpayers and gives it to share investors who have not paid any tax. Australia is the only country in the world to do it.
But the prime minister claims Labor's move will rip $5 billion a year out of the economy.
"Don't believe the lies that say pensioners are immune from it. Pensioners are hit by this as well. Small business owners are hit by this pernicious attack as well," Mr Morrison told reporters in Brisbane on Thursday.
"It's not reform, it's a raid."
Labor is counting on the change to help pay for its election promises, which is predicted to save the budget $55 billion over the next 10 years.
The scheme cost $550 million in 2001 but is soon to rise to $8 billion a year.
Labor says wealthy share investors are organising their investments to maximise payouts from the government while not having to pay any tax themselves.
Shadow treasurer Chris Bowen says handing tax refunds to people who haven't paid any tax is neither fair nor sustainable.
