Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

The Senate is now debating the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2007 and the Tax Laws Amendment (2007 Budget Measures) Bill 2007 in cognate. On behalf of the Labor Party I rise to support these bills, which provide tax cuts to Australian taxpayers. I firstly want to deal with the personal income tax reduction bill. The bill amends the Income Tax Rates Act to increase the threshold at which the 30 per cent marginal tax rate begins to apply and increases the threshold for the top two marginal tax rates. For lower income earners, the bill provides that the 30 per cent threshold will be increased from $25,000 to $30,000, and that applies from the 2007-08 income year. The bill also amends the Income Tax Assessment Act 1936 to increase the maximum amount of low-income tax offset from $600 to $750 per annum and to raise the threshold at which the offset begins to phase out, from $25,000 to $30,000. The level of income at which the offset will begin to phase out is increased from $40,000 to $48,750.

Further, the bill also amends the Medicare Levy Act 1986 to increase the income threshold for taxpayers eligible for the senior Australians tax offset. The 40 per cent threshold will increase from $75,000 to $80,000 and is designed to reduce bracket creep for middle-income earners. The 45 per cent threshold will increase from $150,000 to $180,000 and is designed to better align our top personal tax rate threshold with international standards. The changes to the 40 per cent and the 45 per cent marginal tax rate thresholds will apply from the 2008-09 income year. The Labor Party supports these tax cuts because they reflect our calls for changes to the personal income tax system to deliver greater relief and incentive to middle- and lower income earners. However, it appears it takes an election year for lower income earners to get a tax cut under this government. We all know that Prime Minister Howard is a tricky politician; he is clever. There is an election coming up only a few months away—