Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Hansard source

Firstly, I would like to thank all senators for taking part in the debate on the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2007 and the Tax Laws Amendment (2007 Budget Measures) Bill 2007. The measures contained in the first of these bills provide personal income tax cuts of $31.5 billion over four years. These tax cuts were announced by the Treasurer in the 2007-08 budget. These tax cuts build on the substantial reforms delivered in previous budgets and further enhance Australia’s international tax competitiveness. These changes increase the disposable incomes for all Australian taxpayers and provide further incentives for individuals, including part-time workers, to participate in the workforce.

From 1 July 2007, the 30 per cent marginal tax rate threshold will be increased from $25,001 to $30,001. From 1 July 2007, the low-income tax offset will be increased from $600 to $750, and it will begin to phase out at the start of the new 30 per cent threshold of $30,001. Those eligible for the full low-income tax offset will not pay tax until their annual income exceeds $11,000. From 1 July 2007, senior Australians eligible for the senior Australians tax offset will not pay tax on their annual income up to $25,867 for singles and up to $43,360 for couples, depending on their income split. The increase in the 30 per cent threshold and the low-income tax offset will provide more incentive for those outside the workforce to re-enter it and those in part-time work to take on additional hours.

From 1 July 2008, the threshold for the 40 per cent rate will rise from $75,001 to $80,001. The threshold for the 45 per cent rate will rise from $150,001 to $180,001. In 2008-09, taxpayers will not reach the highest marginal tax rate until they earn more than 3½ times average weekly earnings. Increasing the top threshold will improve the competitiveness of Australia’s tax system. In percentage terms, the greatest cuts have once again been provided to low-income earners. More than 80 per cent of taxpayers face a top marginal tax rate of only 30 per cent or less over the next four years.

I now turn to the Tax Laws Amendment (2007 Budget Measures) Bill 2007 tax. The first part of this bill will increase the dependent spouse tax offset from $1,655 to $2,100 with effect from 1 July 2007. This increase also allows a dependent spouse to earn more income before the offset phases out, increasing the separate net income at which the tax offset completely phases out from $6,901 to $8,681. The second part of this bill increases the Medicare levy low-income threshold for individuals and families in line with increases in the consumer price index. The low-income threshold in the Medicare levy surcharge provisions is similarly increased. These changes ensure that low-income individuals and families will continue to be exempt from the Medicare levy or the surcharge.

The Medicare levy low-income threshold for pensioners who are below age pension age is also increased to ensure that, where these pensioners do not have a tax liability, they will not have a Medicare levy liability. The amendments to the Medicare levy low-income thresholds apply to the 2006-07 income year and later income years.

I again thank those senators who have participated in the debate. I commend the bills to the Senate.

Question agreed to.

Bills read a second time.