The Government’s top tax officials are hoping that a number of new measures in the Senate, including an overhaul of the taxation of multinational companies and the elimination of the corporate tax rate will be enacted by Christmas.
Key points: The Federal Government wants to boost the income tax rate to 11 per cent from 8 per cent in order to close the gap between high-income earners and the rest of us The Government wants tax to be more progressive to benefit the poorest and most vulnerable Australians, and will introduce a number, if not all, of its tax policies through the end of the decade Tax breaks and exemptions are set to be included in the next Senate tax bill and will be rolled out over the next three years Mr Turnbull has also announced that all income tax deductions will be available for families with children and the elderly.
Mr Turnbull told the Senate this morning that the Federal Government will introduce its first major overhaul of taxation since the Howard Government, which introduced a number tax breaks in the 1990s.
“In this context, there’s no doubt that a fair tax system is a top priority,” Mr Turnbull said.
“There will be a lot of new revenue and we’ll have to use it for some good things, but also to pay down debt and to deliver some of the big economic benefits.”
Mr Turnbull also confirmed that the Government will not roll back the personal tax rate from the current 12.5 per cent.
“We’re not going to reverse it, we’re not looking to do that,” he said.’
Very difficult’The changes are expected to increase the income of the middle class by $2,000 a year.
The Government will also introduce a 10 per cent tax on foreign multinationals to help pay for the Commonwealth’s overseas aid.
And it is planning to introduce a 25 per cent bracket for the superannuation contribution tax and a $250,000 bracket for tax deductions for superannuants.
It is also expected to cut the corporate income tax threshold to $11 million from $12.5 million.
“What we’re really trying to do is get our economy moving again, but at the same time we’re also going to make sure that we’re raising some revenues from other sectors,” Mr Hunt said.
“But the big one is to get our tax system moving again.”
Mr Hunt has also ruled out any changes to the personal income tax rates, which currently stand at 11 per per cent and 8 per, and is adamant that any changes will not impact people’s ability to earn or save money.
“If you are someone who is earning $150,000 or $200,000, that’s not a problem, because you can make a significant difference to your income and your savings,” he told the ABC.
“In fact, it would be a great thing if you could make a huge difference to the income and savings of those people.”
But the income that they make is only one-third of the overall income, the rest is the cost of living, it’s the cost to their kids, it is the costs to their grandkids, it affects their retirement, it impacts their retirement savings.
“So the big changes we’re looking to make to the way the tax system works is to make that cost-of-living adjustment more progressive.”
Mr Turner, who is also the Federal Treasurer, also said the Government would be targeting those who can least afford to pay taxes.
“There will not be a reduction in the corporate rate, but we will be introducing a $1,000 per child tax credit,” he added.
‘No tax hikes’The Government has also indicated that it will not impose a $2.5 billion tax on high-frequency traders, who are responsible for most of the volatility in the markets.
The move will apply to new business entities established on or after 1 December 2018, as well as businesses established before that date.
A $1.5-billion levy on the industry is part of the Government’s $5.5 trillion tax package.
“It will apply across all businesses and the entire business sector,” Mr Turner said.
Mr Hunt did not elaborate on what this means in practice.
“You will not see a tax increase,” he acknowledged.
“The Government’s doing what it can to make this tax system fairer, and to ensure that it is not being used as a tool to break the back of middle-income Australians.”
‘A very difficult challenge’Tax reform: The ABC’s Scott Greer reports.
Topics:tax,government-and-politics,government—politics,australiaFirst posted May 02, 2019 07:15:15Contact Greg Storch