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Wednesday, 20 June 2018
Page: 3397

Senator PATRICK (South Australia) (11:12): I will be brief in my contribution to on the Treasury Laws Amendment (Personal Income Tax Plan) Bill. At the outset, I can indicate that Centre Alliance will be moving an amendment that omits stage 3 of the income tax cuts. I understand Labor will move an identical amendment. As an alternative to our amendment we will support theirs. Centre Alliance supports the stage 1 tax cuts. Stage 1 involves an end-of-year rebate for low-income earners and raises from $87,000 to $90,000 the income tax threshold to which the tax rate of 37 per cent applies. The combination of the two will return between $135 and $665 to low-income earners, depending on their income. It's our belief that stage 1 will provide much-needed relief for low-income earners.

Centre Alliance will also support the stage 2 tax cuts. These tax cuts are scheduled to commence from July 2022, with the threshold for the 32.5 per cent bracket being lifted from $37,000 to $41,000 and the threshold for the 37 per cent bracket to go from $90,000 to $120,000. This will give tax relief to low- and medium-income earners and to mum and dad professionals, who have worked hard all of their lives and have helped to generate the recent growth we have seen in the economy. They are entitled to enjoy the fruits of their inputs to our economy. Many of the people in this tax bracket are dealing with large mortgages, high electricity bills and a general rise in the cost of living.

As stated, our amendment knocks out stage 3 of the income tax cuts. Stage 3, which is scheduled to start in 2024, abolishes the 37 per cent tax bracket from the system, creating one middle tax bracket of 32½ per cent for workers who earn between $41,000 and $200,000 a year. We're not convinced that this is prudent at this point in time. We also note the distance in time between the passage of this bill into law and when the amendments come into effect. Whilst we are sympathetic to the idea that companies investing large sums of money on projects spanning multiple years, if not decades, may need to know tax rates into the out years, the same can't be said of individuals. So why commit to this law? Why not wait until there is clarity in the budget bottom line in 2022 or 2023 and then change the tax regime for high-income earners?

Having said that, we do reserve our position in regard to the third stage if our amendments are not successful or if an amended bill is rejected in the House, because we do think that low-income and medium-income earners deserve some tax relief.