Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Hansard source

In summing up this debate, I want to thank members for their contributions to this debate. In concluding the debate, there are a couple of points I just wanted to reinforce to the House. The first of those is who currently pays tax in the country and how much tax they pay when it comes to personal income tax.

When you look at the distribution of that, what you see is that the share of personal tax paid by those on the top tax bracket is 30.3 per cent. The average—median—tax paid by those individuals is $84,600 a year. They represent 4.1 per cent of taxpayers and they pay 30.3 per cent of tax. In the next tax bracket, from $87,000 to $180,000, are just less than 20 per cent of taxpayers, and they pay 34.8 per cent of tax and pay, on average, around $30,500 a year in tax. Combined, those two top tax brackets account for less than a quarter of taxpayers and pay two-thirds of the personal income tax in Australia. The $37,000 to $87,000 threshold—remembering this government increased the threshold from $80,000 to $87,000 a couple of years ago—accounts for more than half of taxpayers. That is 5.4 million taxpayers, in fact. And they pay less than a third of tax—32.5 per cent—and have an average tax paid, based on the 2015-16 data, of $10,400. That's about a third or just over of what's paid on the next tax bracket up and about a sixth of those on the top.

And then you've got those on the lowest tax bracket above the tax-free threshold, and that's 2.3 million taxpayers. It's 23 per cent of all taxpayers—almost a quarter—and they pay 2.4 per cent of personal tax. They pay each year, on average, a median tax of $1,900.

We have a progressive tax system. That is what it is designed to do. Those who earn more pay more—and they pay more not just in terms of dollars, they pay a higher rate overall. A bigger percentage of income is paid in tax for those on higher incomes than for those on low incomes. That is what enables us to provide for a safety net in this country. I don't think Australians subject to that principle at all. In fact, I think they support it. But they don't want to be taken for mugs either. They also understand that the system has to provide reward for effort. As we were reminded by the member for Fenner, humans, if they are in the position of paying less tax, tend to do more.

Mr Pasin interjecting—

As for other taxpaying mammals, I'm not sure what the practice is! The point is this. We have a progressive system. That is a good system but it shouldn't overreach on those who are out there working hard and doing better and become a disincentive for that, because that undermines the economy. So what this tax plan that we have announced in this budget is designed to do is ensure that we conform to that principle. It respects the progressivity of our tax system. In 2024-25, the year when the full plan comes into being, those on $40,000 a year will be paying an average tax rate of 11.2 per cent under our plan and those earning $200,000 a year will be paying an average tax rate of 30 per cent. So the progressivity of the system is not under challenge—not at all. We retain, as indeed we should, a progressive tax system. Indeed, it will move from those on the top tax bracket paying around 30.3 per cent of the total personal tax bill in this country in 2015-16 to, at the end of that plan, 36 per cent. So those on the higher tax brackets will then be paying an even higher proportion.

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