Treasurer Joe Hockey: why Australia needs personal tax cuts

Should there be a new round of tax cuts for Australians, including those in middle to high income brackets?

“If you’re dropping personal income tax and you’ve got a deficit, the money has to come from somewhere”, he says. “It’s also about the interaction with other taxes”. Growing and keeping talent will require Australia to be more competitive on a range of fronts, including having something resembling stable government that keeps to its word, so businesses can plan with confidence. If no action is taken, in the next two years about 300,000 Australians will move into the second highest tax bracket.

“Hockey is the man who increased these taxes, and now he’s promising tax cuts”.

After the speech, he and Mr Abbott said the government was always looking for spending cuts.

He is dismissive of the spending needs of the states. “That’s a tax increase”, he said. “Then they might have some credibility”.

“Back in 1996-97, under the Howard government, the tax burden was less concentrated, with the top 25% paying a majority of income tax”. These cuts should be spelled out in detail before the election.

“That’s exactly what was promised prior to the 2013 election”.

TREASURER Joe Hockey remains confident about the global economic outlook even as world stocks are reeling under a cloud of uncertainty.

“There is no doubt that with the exemptions in place in relation to GST, the GST’s base is narrow, particularly with the growth in the healthcare sector, which is essentially GST-free”, Mr Hockey said.

“An election would put pressure on them”, the source said of the states. If Hockey gets his way and personal income tax rates are massaged to give higher earners some more breathing space, the gap in funds will have to be filled somehow, and given the government’s history it’s pretty likely people less well-off will end up getting slugged more – either at tax time, or just while doing the shopping.

The Treasurer stresses the government wants a “fairer” tax system as well as lower tax.

“That is where people are moving into the higher tax bracket simply because of inflation and wages increase”.

Of course Hockey is only talking about income tax reform here.

Hockey glosses over the problem that cutting income tax would mean that fixing the budget was pushed out even further. “But we still have a budget to balance – we still have a budget to fix…it will be managed through continued discipline on spending decisions”.

None of this is to say tax reform is not needed, or to deny that cutting income tax would have a positive impact on the economy.

These are the people we should be keeping in Australia. In its defence, the government points out that we are not at the green paper stage yet, let alone the tax reform white paper, which comes next year.