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Taxation and the family



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TREASURER

EMBARGO 12.30 PM

NO. 37

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EXTRACT FROM AN ADDRESS BY THE HON JOHN HOWARD, MP

TO THE LUNCHEON OF THE KTAMA/JAMBEROO BRANCH OF THE

LIBERAL PARTY

TAXATION AND THE FAMILY

Single income families are the greatest beneficiaries

from the income taxation changes I announced on 6 March

1980. These reductions totalled over $600 million and

take effect from 1 July 1980.

As with all taxation changes there have been criticisms

that the Government has not done enough or might have

acted in different areas. Let me examine those criticisms

for a moment. ,

As I made clear in my statement of last month and I make

clear again, the Government was concerned to ensure that

the overall impact of the decisions we took served our . .

major goal of reducing inflation. '

By applying the whole of the additional crude oil receipts

of $340 million to reducing the'deficit this year we have

made a major contribution towards reducing the upward

pressure on interest rates in Australia. * '

This is something of direct and continuing concern to

virtually all Australians. .

Who amongst us does not pay interest or is not likely to

borrow some money in the near future? .

2 .

"It is true that some people will benefit more from"the

tax changes than others. This is no accident. Quite

deliberately, the Government chose to act in a way "that

was of greater benefit to single income families than

others.

T his,was because we believed this section of the tax

paying community had been comparatively disadvantaged ,

over the years by existing taxation arrangements.

Opinions will obviously differ as to the equity within

the taxation system, and whilst I do not believe that

all of the arguments advanced about the position of

single income families are necessarily valid, I do

believe that action should have been taken to correct

the present bias against them.

In deciding to substantially increase the spouse rebate

we have acted in a way which is of greatest relative help

to single income families on low incomes. . . ·

The spouse rebate will rise from $597 a year to $800

a year as from 1 July next.

This represents· a veok’.y gain cl ab.rat $3 . S v · bo c - : very .

taxpayer entitled to claim this rebate.

To a taxpayer on $20,000 a year,, this will imply a

reduction of 4.1 per cent in tax payable whereas to a

taxpayer on $12,000 it will imply a reduction of 10.4 per cent.

The value of the increase to $800 and indeed the extent to

which the relative position of the single income family

has been improved as a result of my announcement on 6 March

is further illustrated in examining a table which I have had

prepared regarding the comparative position. (Attached).

In 1975/76 the spouse rebate was $400. As from 1 July,

it will be $800.

Consequently, from 1 July next, a taxpayer on average

weekly earnings with a dependent spouse will pay almost

26 per cent less tax than a single taxpayer on the same

income, compared with a difference of 19.4 per cent in

January 1976. . .

CANBERRA

9 APRIL 1980

Average Weekly : Earnings

Jan

Jul

Single taxpayer

$ $

1 9 7 6 . 1 6 7 . 4 0 3 9 . 2 5

1 9 7 7 1 8 7 . 8 0 4 3 . 7 0

1 9 7 8 2 0 6 . 9 0 4 7 . 9 5

1 9 7 9 2 2 2 . 0 0 5 2 . 9 0

1 9 8 0 2 4 3 . 5 0 5 5 . 8 5

1 9 8 0 2 5 5 . 0 0 5 8 . 9 0

PAYE

Deduction

Difference in Tax

Payable

Taxpayer with -dependent spouse ' '

.$ $

Differente . in Tax

Payable · ' ·

?·â– ;

3 1 . 6 5 7 . 6 0

. ϊ . β

1 9 J 4

3 4 . 1 0 · .. 9 . 6 0

' - ' · f>..

■ 2 2 . 0

3 7 . 4 0 1 0 . 5 5 2 2 . 0

4 1 . 5 5 1 1 . 3 5 2 1 . 5

4 4 . 5 0 . ■ 1 1 . 3 5 2 0 . i

4 3 . 7 0 1 5 . 2 0 ■ 2 5 . 8 '

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