Treasurer Joe Hockey will use a speech today to signal the federal government will bring personal income tax cuts as an option to the next election, due in about a year.
Hockey, who is due to present a tax options paper before the next election, says the failure to cut personal income tax rates is a disincentive to work at a time when the economy needs to be stoking consumption – and that means putting cash in people’s pockets.
He will say that the “tax system is holding us back from reaching our end goal of a stronger economy”.
“Our forthcoming options paper on tax reform will include options for cutting personal income tax. We don’t have any other choice,” Hockey will tell a conference of the Tax Institute and Chartered Accountants.
“If people are left in those higher tax brackets … the incentive for hard work is blunted — and inflation means that without a real wage rise, people pay a higher and higher average tax rate each year.”
In comments likely to draw fire, Hockey will also raise the possibility of tax cuts for the highest earners, with an increase in the top marginal tax rate threshold of $180,000 threshold as well as a reduction in the rate. “At the moment, 2.7 per cent of Australian taxpayers fall into the top income tax bracket, and they are paying more than 28 per cent of all income tax,” he will say.
There’s more at the ABC.
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