Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

TREASURY LAWS AMENDMENT (TAX RELIEF SO WORKING AUSTRALIANS KEEP MORE OF THEIR MONEY) BILL 2019

This Bill lowers taxes for hard-working Australians.

Our tax plan was carefully developed and it was detailed comprehensively in this year's Budget before being put to the Australian people at the election just six weeks ago.

The Australian people were presented with a clear choice between the Coalition's $158 billion of tax cuts and Labor's $387 billion of higher taxes.

They delivered their verdict loud and clear in favour of our tax plan and rejecting Labor's tax hikes.

Values drove our policy, with Liberals and Nationals wanting to put more money in people's pockets, reward effort and encourage aspiration.

This Bill delivers on that commitment, a further $158 billion of tax relief.

Our tax cuts provide both short-term relief and long-term reform.

Australians earning up to $126,000 a year will receive up to $1,080 with more than ten million Australians better off.

This means that a couple, say a teacher and a tradie, each earning $60,000 a year, will get $2,160 in their family wallet.

This tax relief will boost household incomes and ultimately household consumption, which will be good for the economy.

In 2024-25, the Government will reduce the 32.5 cent tax rate to 30 per cent. This will accompany the abolition of an entire tax bracket, the 37 cent tax bracket, which we have already legislated.

The longer term structural reform will mean hardworking Australians will face a single marginal tax rate of 30 cents in the dollar on the taxable income they earn between $45,000 and $200,000.

Someone who moves up the income scale getting a promotion, working more hours or taking a second job will under these reforms get protection from bracket creep.

This will improve the incentives for working Australians and reward effort.

As a result of the Government's plan, around 94 per cent of Australian taxpayers are projected to face a marginal tax rate of 30 per cent or less in 2024-25. This compares to just 16 per cent if stages two and three of our tax package didn't go through.

Around 13.3 million taxpayers will pay permanently lower taxes by the time the Government's plan is fully implemented.

The Government's personal income tax measures will increase aggregate household income by around $8 billion each year over the forward estimates period. This will help to support consumption growth. Given that household consumption makes up around 60 per cent of the economy, the Government's plan will help support economic growth.

Lower taxes will increase the financial return from work, with higher take home pay helping to encourage workers to re-enter the workforce, or work additional hours if they wish.

It will also tackle bracket creep that sees workers hit with a higher marginal rate as their wages go up to compensate for inflation.

Our tax relief measures will keep taxes as a share of GDP within the 23.9 per cent cap ensuring that we don't impose an increasing tax burden on hard working Australians. Securing future tax cuts now will provide confidence to Australians that they will be rewarded for their hard work and helps to protect their future pay increases from bracket creep.

The Government is committed to delivering a tax system that rewards effort and aspiration. A tax system that promotes opportunity and drives investment and growth. A tax system that underpins a strong economy and opportunities for all Australians, now and in the future. A tax system where all individuals and businesses pay their fair share, so that the Government can guarantee the essential services Australians rely on.

The Government's plan will maintain a progressive tax system. It is projected that in 2024-25 around one third of all personal income tax will be paid by the top 5 per cent of tax payers, a slightly higher proportion than what they currently pay.

Schedule 1 to the Bill enhances the current low and middle income tax offset (LMITO) by increasing the base offset from $200 to $255 and the maximum benefit from $530 to $1,080 for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. Schedule 1 of this Bill also increases the amount of the low income tax offset from $645 to $700 from 2022-23.

Schedule 2 to the Bill increases the top threshold of the 19 per cent tax bracket from $41,000 to $45,000 from 1 July 2022. It also reduces the 32.5 per cent rate to 30 per cent from 1 July 2024.

The Government's first legislative priority for the 46th Parliament is consideration of the Government's tax cut plan we took to the election.

I call on the Parliament to respect the wishes of the Australian people so tax relief can flow to Australians quickly.

Promptly pass this Bill this week. Pass it in full.

Lower taxes are part of the Government's plan for a stronger economy.

Full details of the measures are contained in the Explanatory Memorandum.

I commend this Bill to the House.