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Wednesday, 27 June 2001
Page: 28692

Mr CAMERON THOMPSON (2:09 PM) —My question is to the Treasurer. Would the Treasurer advise the House how Australians on average weekly earnings have benefited and will continue to benefit under the new tax system?

Mr COSTELLO (Treasurer) —I thank the member for Blair for his question. I can inform the House that, under the government's new tax system, from 1 July last year Australian income tax payers received an income tax cut. They received it in full and on time. As a consequence of the government's reform of income taxes, if you earn between $20,000 and $50,000 per year, you face a marginal income tax rate no higher than 30 cents in the dollar. That applies to 80 per cent of Australian taxpayers. Average weekly ordinary time earnings in Australia today are $42,000. If the Labor Party's income tax rates were still in place today, a worker on average weekly earnings would be facing a marginal tax rate of 43 cents in the dollar. It was only because the Labor Party failed in stopping us reforming the income tax system that that marginal tax rate has been reduced for average earners from 43c to 30c.

If we look at the taxation statistics, in 1998-99 there were nearly 1.3 million people who had taxable incomes between $38,000 and $50,000. Those people who under Labor would be on a 43c top marginal tax rate are now facing a top marginal tax rate no higher than 30 cents in the dollar. Tax relief for 1.23 million people, in reducing their top marginal rate from 43c to 30c—

Opposition members interjecting—

Mr COSTELLO —No wonder the Labor Party seeks to interject, because they do not like to hear that, if it had not been for tax reform, that marginal rate would be 43 cents in the dollar rather than 30 cents in the dollar.

In addition to that, of course, the government introduced increased family assistance of $2.4 billion a year, as the minister has said. Let me talk about a family on average earnings of $42,000 with one child under five and two children in addition—a family with three children. Taking together their tax cut and their family assistance, that family has received, by way of a tax cut and an increase in family assistance, an extra $86 a week as a consequence of tax reform.

Why would the Labor Party have opposed tax reform? They opposed tax reform out of a mean, ideological, socialist spirit. They did not want to let average workers have a lower marginal tax rate. They did not want to help families. They were wedded to the wholesale sales tax of the 1930s, and they opposed great benefits for families on middle incomes. Families on middle incomes had tax relief delivered by the coalition, which has always been the party to support middle Australia.