Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Hansard source

. It is a great honour to be able to speak during the consideration of the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. Here is an example of a government with a plan for the future that gives tax relief to low- and middle-income earners immediately, ensuring that we address the ongoing issue of bracket creep into the medium term, and making personal income taxes simpler and flatter in step 3 of our plan. This is a plan that will ensure that we work towards a stronger economy. We know and every piece of evidence suggests that if we can assist and encourage aspiration, if we can assist Australians to keep more of their hard-earned money in their own pocket, it strengthens the economy.

In contrast to the Labor Party, we don't think it assists the economy to strangle it with ever higher taxes. We also believe, in contrast to the Labor Party, individuals' hard-earned money is theirs; it's not government's. It's not ours to bestow upon them. The Labor Party would suggest that a government just benevolently allows you to keep a bit more of your own money—no, this is their money. It's been said that this plan will deliver lower, fairer and simpler taxes. We know and we believe that this will strike a balance between improving the outcomes for low- and middle-income earners and ensure that those who are fortunate to be in higher tax brackets pay the appropriate amount of tax. We know that, with the very progressive tax system that Australia has, higher-income earners pay a much greater and disproportionate share of personal income tax. If you look at Australia, as compared to most of our competitors in the OECD, we have a disproportionate and quite a large reliance on personal income tax.

This is a seven-year plan. It is a plan; it is not a cash splash prior to an election, as the Leader of the Opposition outlined in his budget-in-reply speech. This is a plan to ensure that we give people relief immediately, that we address bracket creep so people don't move into ever higher tax brackets and, in the end, that we make our tax system fairer and simpler by removing the 37 per cent marginal tax rate. Importantly, it will mean that 94 per cent of Australians will never pay more than 32½ per cent as a marginal tax rate. In essence, you get to keep two-thirds of your income and the government will take a third. I think most Australians believe that's pretty fair.

This bill will put in place a new non-refundable tax offset for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. The offset, importantly, will assist over 10 million Australians, with the maximum benefit of $530 being provided to at least 4.4 million taxpayers. Taxpayers earning in the range of $48,000 to $90,000—not high-income earners, millionaires or billionaires, as the Labor Party would outline—will receive that maximum benefit. The offset will similarly provide a benefit of up to $200 for taxpayers with taxable incomes of up to $37,000, and from $37,000 it will increase at a rate of 3c per dollar to that maximum benefit of $530 that I just referred to for taxable incomes of $48,000 or more. The offset will phase out at a rate of 1½c per dollar for taxable incomes between $90,000 and $125,000.

This is calibrated tax policy to ensure that the benefits are being provided to people who are working hard, who are contributing to our society and who are paying their taxes. It is allowing them to keep a little bit more. For a double-income family, it will mean over a thousand dollars a year more in a tax offset that they will be able to put towards their electricity bills, the children's school fees, the children's books or the children's school uniforms. So many of these costs that often arrive in one go will be met by an offset that people will now receive at the end of the income year. As I've said, for a double-income family, that'll be over a thousand dollars.

Step 2 of the tax plan—a well-thought-through plan—is to combat bracket creep. We know that, in a tax system such as ours, we on this side of the House are always trying to find ways that we can combat bracket creep, and this year's budget does so in extraordinarily wonderful ways. From 2018-19, the top threshold for the 32½ per cent tax bracket will be increased from $87,000 to $90,000. It's important to note that this builds on the hard work done in last year's budget to increase that threshold from $80,000 to $87,000. So in two income years that 32½ per cent tax bracket will have moved from $80,000 to $90,000. From 2022-23, the top threshold of the 32½ per cent bracket will be further increased from its soon-to-be $90,000 threshold to $120,000, and the top threshold of the 19 per cent tax bracket will be increased from $37,000 to $41,000. The low- and middle-income tax offset in that year will be replaced by increasing the low-income tax offset from its then-to-be rate of $445 to $645. This will be a permanent change to the LITO that ensures that the benefits provided to low- and middle-income earners commencing from 1 July this year will be a permanent feature of the system, and it ensures that the benefits that are locked in in step 1 of the tax plan become a permanent feature of our tax system for those low- and middle-income earners from step 2 of the tax plan.

Step 3 of the tax plan is extraordinarily important, in simplifying and flattening our tax system. We know we have an extraordinarily progressive tax system, and we believe on this side of the House that it's an extraordinary piece of work that must be done to ensure that we have this ambitious proposal to flatten the tax system. So, from the 2024-25 income year, the top threshold of the 32½ per cent tax bracket will be further increased from $120,000, which it will have been increased to in step 2 of the plan, to $200,000, which will completely remove the 37 per cent tax bracket—of course, simplifying our personal income tax system and more importantly, in layman's terms, ensuring that those individuals who are not millionaires or billionaires by any stretch of the imagination are not paying more than 32½c in the dollar until they reach that $200,000 threshold. This will mean that the majority of people will stay in the same tax bracket their whole lives. They won't have to move onto oppressively higher tax rates on incomes that you wouldn't describe as being extraordinarily high. That is going to assist in participation in the economy and assist in people doing and seeking to do additional hours and not being punished for those pleasant but unexpected pay rises or pleasant but unexpected promotions, which, at the moment, under the current tax system, push people onto higher and higher tax rates. These changes will mean that 94 per cent of Australians won't pay more than 32½c in the dollar in their lives. We think that is an extraordinarily important step in this plan—because this is a plan. It's not a feature of one budget or two budgets; it's a plan, and it can be legislated by this parliament now. It can be locked in. We can say to Australians, with confidence as a parliament and a Senate, 'You can expect personal income tax relief each year for the next seven years.'

I know many Australians, particularly during the Howard and Costello years, became pleasantly accustomed to personal income tax relief almost year on year. Until last year's budget, when the middle threshold was moved from $80,000 to $87,000, Australians had not seen that personal income tax relief for many years. As a parliament and as a government, we are very keen to ensure Australians can have the certainty over the next seven years that, as they work harder, as they try to provide for their families and as they work hard, day in, day out, we have said to them, 'We can guarantee a plan and a framework by which you are guaranteed additional personal income tax relief, year on year, for the next seven years.'

We think, in the end, that this bill and the plan contained within it reward effort, foster aspiration and improve the opportunities to strive for success in your own life. That shows, in the end, the competing visions that we have in this parliament. Do we have a plan for aspiration, or is there a bitter, jealous—

See this speech in context