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Tuesday, 17 March 1987
Page: 974

(Question No. 4586)

Mr Cross asked the Treasurer, upon notice, on 18 September 1986:

(1) What percentage of taxable income would be payable under a system of flat-rate income tax in order to raise the same amount of revenue proposed to be raised by income tax on individuals in the 1986-87 year (a) if the tax threshold remained the same as at present, and (b) if the tax threshold were removed.

(2) At what level of taxable income in each case would a taxpayer pay less under the flat-rate system than at present.

(3) What number of taxpayers in each case (a) would pay less than at present and (b) would pay more.

Mr Keating —The answer to the honourable member's question is as follows:

(1) It is estimated that the same revenue yield from the 1986-87 income year rates of personal income tax could be raised by the application of a flat rate of (a) 32 per cent assuming retention of the zero rate on taxable income up to $4890 together with the rebates for dependents, etc. at their existing levels, and (b) 24 per cent to the whole of the taxable income of all individuals who are at present taxable assuming retention of the various rebates. Inclusion of income of people at present non taxable, would of course, change the position, to an extent not presently readily quantifiable.

(2) The level of taxable income where a taxpayer would pay less under such a flat rate system compared to the 1986-87 income year rates of personal income tax is (a) $26106 and (b) $23279.

(3) The number of taxpayers who would pay less under such a flat rate system is estimated to be about (a) 1.4 million and (b) 2.0 million. Similarly, the estimated number of taxpayers disadvantaged is estimated to be about (a) 5.6 million and (b) 5.0 million. A further substantial number of people at present non taxable would be disadvantaged under (b).