Trevor Evans (Brisbane, Liberal Party) Share this | Hansard source

I move:

That this House:

(1) notes that the Parliament recently passed the Government's Personal Income Tax Plan;

(2) further notes that:

(a) this legislation gives everyone who works a cut in their income tax bill; and

(b) the effect of this legislation means that over the next seven years 94 per cent of Australians will not face a tax rate of higher than 32.5 cents; and

(3) congratulates the Government for supporting working people and providing the economic leadership our country needs.

The coalition government is all about delivering lower, fairer, simpler taxes. Lower taxes are part of the Liberal Party's DNA, just as higher taxes are the constant hallmark of other parties. The government is building a personal tax system that encourages aspirational Australians to get ahead whilst being fiscally responsible. That's why the government's personal income tax plan is such an important step towards making lower, fairer and simpler taxes a reality for everyday Australian workers.

The first step of the government's plan provides tax relief straight to where it's needed most: to low- and middle-income earners. The second step will help tackle bracket creep, and the third step will simplify the tax system. Together with our company tax relief already being delivered right now, today, to Australia's small and medium businesses—helping, I add, incidentally, to drive the strongest growth in jobs on record—and the tax integrity reforms, these personal income tax reforms will reward hardworking Australians and drive an even stronger economy. At its core, the effect of the legislation means that, over the next seven years, 94 per cent of Australians won't face a marginal tax rate higher than 32.5c.

Let's put these tax reforms into some historical context just to understand how significant they are for everyday Australian taxpayers. Years ago, at the time of the tax summit held at the beginning of the Hawke government's second term, just over half of all Australian taxpayers were subject to a marginal tax rate of over 30c in the dollar and around 10 per cent of taxpayers were subject to a marginal tax rate of 60c in the dollar. By the time Paul Keating had taken over from Bob Hawke and the 'fightback' election took place, almost 80 per cent of all taxpayers were subject to a marginal tax rate of over 38c in the dollar and around 20 per cent of all taxpayers were subject to a marginal tax rate of 47c in the dollar. By the end of the Keating Labor government, around 80 per cent of all taxpayers were subject to a marginal rate of 34c in the dollar or more and about nine per cent of all taxpayers were subject to that marginal tax rate of 47c in the dollar.

By around midway through the Howard government, in the aftermath of the implementation of the GST and the new tax system, around 75 per cent of all Australian taxpayers were subject to a marginal tax rate of 30c in the dollar or more and around 10 per cent of all taxpayers were subject to a marginal tax rate of 47c in the dollar.

By the middle of the Rudd-Gillard-Rudd government years, around 70 per cent of all taxpayers were subject to a marginal tax rate of 30c in the dollar or more and around two per cent of taxpayers were subject to a marginal tax rate of 45c in the dollar. By the start of this coalition government coming to office in 2013, around 75 per cent of all those with taxable incomes were subject to a marginal tax rate of 32.5c in the dollar or more and around four per cent of all taxpayers were subject to the highest marginal tax rate of 45c.

Over time, more and more taxpayers have been pushed into higher tax brackets, dampening the incentive to work more, innovate and get ahead, and having all sorts of perverse and unintended consequences when the tax scales intersect with eligibility thresholds for other government programs, rebates and other payments. I reiterate: the effect of this recently passed legislation is that, over the next seven years, 94 per cent of Australians won't face a tax rate of higher than 32.5c in the dollar. Given that personal income tax accounts for over half of the government's overall tax revenue, it's just imperative that we get the settings right and build a better tax system for the long-term benefit of this country and for all Australians, including future generations.

This government is doing something about the tax burden faced by Australians. We are delivering, despite the efforts of those opposite to frustrate and obstruct good reforms like this over the term of this government. Higher taxes, including bracket creep, reduce the reward for that. It undermines the incentive to work hard, take risks and succeed. Our plan delivers a tax system that encourages aspirational Australians to get ahead. If we'd left the tax system unchanged, only 63 per cent of taxpayers would have faced that marginal tax rate of no more than 32.5c by the time this plan's implemented—in other words, about one in three Australian workers in the future will be avoiding unnecessary bracket creep.

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