A stronger, smarter and fairer personal tax system
Australians value a fair society that provides opportunity for all Australians to share in our growing prosperity. A stronger, smarter and fairer personal tax system should reward hard work and encourage saving, while ensuring everyone pays their fair share of tax.
It also means ensuring that the personal tax system provides a strong and stable funding stream for important public services including health, education and, in this Budget, DisabilityCare Australia.
A Progressive Personal Tax System
One of the principal means by which prosperity is shared is through our progressive personal tax system, complemented by a targeted transfer payments system. Under our progressive tax system, people with higher taxable incomes pay more tax as a proportion of their income than people on lower incomes. On the transfer payments side, the Government targets assistance to lower income earners and withdraws this assistance as incomes increase.
Progressivity can be enhanced by ensuring tax offsets and other concessions within the personal tax system are carefully targeted, so that support is provided to those who need it most.
Removing Disincentives To Participation And Providing Fair Rewards For Work
One of our greater socioeconomic challenges is the ageing of the Australian population. This will increase demand for government services when proportionately fewer people will be working to support the needs of an older population. The steps we take now as a nation to lift workforce participation and provide fair reward for effort will help us to deal with the ageing challenge.
Both personal income taxes and the withdrawal of benefits as incomes increase can detract from participation by lowering the returns from work. This is particularly the case for low income and secondary earners.
A strong, smart and fair personal tax and transfer system should balance appropriately rewarding work and supporting participation with properly targeted tax relief and payments to families so that the tax-transfer system remains fiscally sustainable.
The Government has introduced a number of reforms that build a more sustainable personal tax system, deliver the revenue needed to fund important services, encourage workforce participation and provide fair rewards from work.
Additional government benefits for families introduced in 2012-13
| Schoolkids Bonus | = $1,230 | Total Benefit = $2,130 |
|---|---|---|
| Income tax cuts | = $381 | |
| Household Assistance Package | = $73 | |
| Low Income Super Contribution | = $446 |
See also page 15 for tax cuts since 2007-08