Channelling a further 30
per cent of revenue to income tax cuts for those earning
up to $80,000 would allow the government to shave 1 to
2.5 percentage points off the bottom two tax rates.
Tax cuts of this magnitude
would fully offset the GST increase for most low and
middle-income households – those earning up to $100,000
a year – while also providing some benefit for those
further up the income distribution.
Those tax cuts would also
boost the work incentives for low to middle-income
taxpayers, who were most responsive to changes in
effective tax rates.
That would leave about 40
per cent of the additional revenue raised from a broader
or higher GST – between $7 billion and $11 billion – for
state governments to improve their health budgets, and
for the Commonwealth government to reduce its budget
deficit, or to pay for other taxes that promoted
economic growth.
Mr Daley said some
Australians would end up paying under such a regime, but
in many cases that would be fair.
"Self-funded retirees are
not getting pensions, they're paying precious little
income tax which is, itself, a problem, but they will
pay additional consumption tax," he said.
"Bear in mind that people
over the age of 65 today are paying less income tax in
real terms than they did 15 years ago.
"And that's even though participation rates have gone up
– so more of them are working – and even though their
hourly rates have gone up like everyone else's has. So
everyone else is paying more income tax in real terms
than they used to be, but the over-65 cohort isn't."
The Turnbull government has repeatedly said it is not
considering raising the GST to 15 per cent.
However, it would like
Australians to have the debate.
Source::
Sydney Morning Herald, dated 07/12/2015. |