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

I thank the honourable member for Bass for his question. I can inform him that in two weeks time, on 1 July, every Australian paying income tax will receive an income tax cut as a result of this year’s budget. Low-income earners will benefit from an increase in the low-income tax offset so that they will not pay tax until their annual income exceeds $10,000. Those on the lowest tax rate of 15 per cent will not go into a higher tax bracket until their taxable income goes past $25,000. Those on the 30 per cent tax rate will not pay a higher marginal tax until their taxable income goes past $75,000. For those on the two top tax rates, both the rate is cut and the threshold is increased so that the 42c rate is cut to 40c and applies to those on incomes between $75,000 and $150,000 and those on the top rate have a reduced top rate of 45c in the dollar and it applies only to each dollar of income over $150,000. That means that, from the lowest paid to the upper income earners, every Australian will receive an income tax cut from 1 July—the beginning of next month.

These tax cuts follow on from the tax cuts in the A New Tax System, which was introduced in 2000. They follow on from a round of tax cuts in the 2003 budget of $2.4 billion per year, tax cuts in the 2004 budget of $14.7 billion over four years and tax cuts in the 2005 budget of $21 billion over four years. These tax cuts, which start on 1 July, total $36.7 billion over four years. This compares favourably to those of previous governments. The last Labor government did not fulfil its promise to cut taxes even though it put them into legislation before the 1993 election. Not only could you not believe what the Labor Party said; you could not rely on the legislation of the Labor Party, which legislated tax cuts before the 1993 election and then took them back. Mr Keating, the then Prime Minister, famously said, ‘They are not a promise; they are l-a-w.’ But they turned into a complete falsehood, of which the current Leader of the Opposition was very much a part.

From 1 July 2006, 80 per cent of Australian taxpayers will face a top marginal tax rate of 30 per cent or less. Under the tax scales announced in the 2006 budget, a person on average weekly earnings will pay $1,209 less than they would have under an indexed 1995-96 scale. Let me repeat that: if we had indexed the 1996 scales to CPI, a person on average weekly earnings would have paid $1,209 more than they will pay from 1 July. This government has been able to run economic policy, to manage the economy, to cut taxes and to give Australians opportunity at work. The Labor Party has fought us every step of the way. Labor is the anti-reform party of Australian politics, and the Australian people would be worse off under its policies.

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