Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

I thank the honourable member for Braddon for his question. I can inform him that, as a consequence of last night’s budget, all Australians—people in Braddon and people in other electorates throughout Australia—will get a reduction in income tax. As a consequence of last night’s announcement, Australia will now have four income tax rates: 15c, 30c, 40c and 45c. The thresholds will be $25,000 for the 15c rate, $75,000 for the 30c rate, $150,000 for the 40c rate and 45 per cent after that.

The consequence of this is that the vast bulk of Australians, who have incomes between $25,000 and $75,000, will face no higher marginal tax rate than 30c in the dollar. They will not be subject to bracket creep. On 1 July, the top tax rate of 45c will apply to only two per cent of Australian taxpayers. When this government came to office, you went onto the top tax rate of 40c in the dollar at $50,000. If this government had indexed the labour rate, that top rate would cut in today at $64,000 but, as a result of last night’s changes, that top rate will no longer cut in until you are earning above $150,000. That applies to only two per cent of Australian taxpayers. In addition to that, the government has introduced a low-income tax offset, which means that low-income earners will not pay tax until their income goes above $10,000. In addition to that, this government has introduced new family allowances.

The reasons we have the opportunity to cut taxation are that we can fund our investments in health and ageing and education, we have had nine surplus budgets out of the last 10 and we have now repaid Labor’s debt—the debt that was left to this country in 1996 by none other than the current Leader of the Opposition when he was Minister for Finance. This is what opportunity is about for all Australians, and tax reductions will ‘incentivise’ our tax system in Australia.

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