Bill Shorten (Maribyrnong, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. Is the Prime Minister aware that NATSEM has said about stage 3 of his personal income tax scheme:

… this new tax system from 2024-25 is less progressive than the current system. It means higher income inequality - the rich get more of the tax cuts than the poor.

Prime Minister, how is this fair?

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

It is a fair and progressive tax reform, precisely because it gives Australians—94 per cent of Australians, in fact—the surety that they will pay no more than 32.5c in the dollar for every additional dollar they earn. We all remember Dr Craig Emerson, who used to talk a great deal about effective marginal tax rates and all of the problems occasioned by that. We're very well aware of those issues. The member for Fenner has written about them. This gives you a 32.5c marginal tax rate from $41,000 to $200,000. It ensures you have every incentive for people to get ahead.

The approach that we're taking is one that provides benefits to Australians right in the heart of that middle-income area, where Australians have had so many disincentives from bracket creep. It is a very positive reform and, as far as the issues about inequality are concerned, I come back to this point: after the plan is fully rolled out, the people on the 45c marginal tax bracket—that is, those earning over $200,000—will be paying a larger share of the personal income tax than they do today. A person on $200,000, who is earning roughly five times as much as somebody on $41,000, will be paying nearly 13 times as much tax. That is a progressive tax system.