Libs push for tax cuts – Herald Sun
AFTER enduring an extended period of stagnant wages and runaway energy and housing costs, Australians are in need of tax respite.
Indeed, the typical Australian household earns less today than it did in 2009 and the Reserve Bank of Australia reports that wages are at their lowest share of total income in half a century.
Wage growth increased just 1.9 per cent in the year to March 2017 but, with headline CPI at 1.8 per cent, even that minimal rise is wiped out. Middle-income earners will be hit hardest over the next four years with tax bracket creep pushing 1.6 million workers into higher tax rates, according to analysis by the Parliamentary Budget Office. In an acceptance that higher disposable income is not just an economic and employment driver, Treasurer Scott Morrison has also positioned tackling record low wage growth as the “biggest challenge” facing Australia’s economy. Together with the negating reality of bracket creep, hardworking pay-as- you-earn taxpayers have been either treading water or going backwards. As revealed in today’s Herald Sun, a growing number of Coalition MPs are pressing Prime Minister Malcolm Turnbull and Mr Morrison to reward middle-Australia’s patience with much-needed tax cuts.
Some Liberal members are arguing personal tax cuts could even be paid for by delaying the government’s further company tax cuts, which face major hurdles from Labor and the Greens. Over the next four years the government will impose a 27.5 per cent corporate tax rate for companies with an annual turnover of up to $50 million, and reduce that to 25 per by 2027. Certainly, in order to compete internationally and draw investment into Australian business, lower corporate tax rates are a must. Company relief is the key to employment growth. But additional targeted cuts should be considered alongside a need to lift the burden on wage earners and reduce personal and business tax in tandem. With a federal poll scheduled to be called late next year, or perhaps earlier if the dual-citizenship crisis deepens, tax cuts on a re-election agenda would gain strong traction with voters. But while Budget repair cannot simply be jettisoned or delayed, massive cost savings must come from more efficient government spending, less bureaucratic waste and continued clampdowns on welfare and tax fraud. When it comes to personal tax relief and Budget savings, it is not a one or the other argument.
Victorian federal MP Tim Wilson, who is backing personal tax cuts as early as next year, is pushing for dramatic modernisation of the tax system with an emphasis on more consistent rates and consumption taxes. Whether that means a lower, flat tax for most levels of personal income and a higher GST rate is yet to be debated. But in order to combat bracket creep and reward effort, major tax revenue change or cuts, or both, is required.
In last year’s federal Budget, the Turnbull Government reset the middle-income bracket from $80,000 to $87,000, resulting in those below the higher cap paying 32.5 cents in the dollar rather than 37. But tax creep is an annual and ongoing problem and minor changes get quickly eroded. Tax cuts and tax reform are needed and overdue.
20 Nov 2017
Herald Sun, Melbourne