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Friday, 19 October 1984
Page: 2069

Senator MAGUIRE —I ask the Minister representing the Treasurer whether any taxpayers will move into lower income tax brackets from 1 November. If so, how many will do so and how many taxpayers will be completely free from liability for income tax as a result of the Budget initiatives to come into effect on 1 November?

Senator GRIMES —It is estimated that 2.5 million taxpayers will move into lower taxation brackets because the 30c in the dollar bottom tax rate in existence under the Government of the Liberal and National parties has been replaced by a new rate of 25c in the dollar to come into effect next month. Of course, that 25c in the dollar tax rate will apply to incomes up to $12,500. However, all taxpayers will benefit from that rate because it applies also to the first $12, 500 of all higher incomes. Some 60,000 taxpayers will be freed from income tax liabilities in 1983-84 as a result of the Budget changes. Some 85,000 taxpayers will be freed in a full year. These numbers reflect first of all the introduction of the new $50 and $75 tax rebates for social security beneficiaries from which about 25,000 people will benefit and, secondly, the introduction of the new 25c in the dollar tax rate in conjunction with existing rebates such as the dependent spouse rebate, the sole parent rebate and the pensioner rebates.

At the old 30c in the dollar tax rate the dependent spouse rebate of $1,030 meant that taxpayers with incomes up to $8,028 per annum paid no income tax. At the 25c in the dollar tax rate the threshold has been lifted to $8,715 in a full year. Also the income tax exemption for the sole parent rebate has risen from $7 ,195 to $7,715. As Senator Maguire implied in his question, a considerable number of taxpayers in this country will move to lower taxation brackets. Everyone will benefit from the tax cuts in the last Budget. In fact, that lower marginal tax rate, in combination with the special rebates introduced, will benefit a considerable number of taxpayers, particularly those taxpayers in most need.