- In the 2015-16 financial year, the Australian Tax Office (ATO) collected $186 billion in personal income tax.
- 65% of that figure was collected from just 23% of taxpayers.
- Australian Treasurer Scott Morrison flagged income tax cuts in the upcoming Federal Budget.
Australian Treasurer Scott Morrison has flagged personal income tax cuts for the taxpayers in the top income brackets in a major speech today ahead of the federal budget.
Speaking to the Australian Business Economists Forum in Sydney today, Morrison outlined his case for cuts saying that the 2015-16 financial year, the Australian Tax Office (ATO) collected $186 billion in personal income tax.
Australians with a taxable income of more than $87,000 paid nearly two-thirds of that amount.
Australians with a taxable income of more than $180,000, some 416,000, paid $56 billion in income tax, or 30% of the total personal income tax take.
Two million taxpayers in the second-top bracket, with a taxable income between $87,001 to $180,000, paid $65 billion in FY15/16.
“We have a progressive tax system in Australia. It is what makes us a fair society. It is what enables us to provide a strong and reliable social safety net,” Morrison said in his speech.
“But we cannot push this to breaking point, where you only end up committing economic self harm.”
“The income tax burden is already falling on a smaller group of Australians who also play a critical role in creating and building the stronger economy that all Australians rely on.”
As such, income tax relief looks set to be the centrepiece of the upcoming Federal Budget released in less than two weeks time, fitting with the view expressed by Morrison that Australia’s tax and welfare system should “reward effort and foster aspiration” and be “fair and balanced for all Australians”.
“This year’s Budget we will be delivering tax relief to put more money back in the pockets of middle to lower income Australians to deal with their own household and family budget pressures,” Morrison said, acknowledging that many have been doing it tough and yet to experience the benefits of stronger economic conditions.
“By prioritising these households with tax relief and not hitting those who are already carrying a significant tax burden, we believe we are getting the balance right.”
Morrison said the reforms will be both both “affordable and responsible” as to not risk the government’s AAA credit rating.
“We will do it and stay on track to bring the budget responsibly back into balance which has been consistently projected for 2020-21 for five consecutive budgets and budget updates. As a result, nor should this compromise our AAA credit rating,” he said.
“We will be targeted and we will be measured. Action taken will be part of a broader plan. And we will deliver tax relief in the most efficient and affordable way. So expectations should be conditioned to these parameters.
“And that is primarily what this year’s Budget will be about.”
Morrison will deliver Australia’s 2018/19 budget on Tuesday, May 8.
Business Insider Emails & Alerts
Site highlights each day to your inbox.