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Bracket creep Pete - the $17 billion man.



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MEDIA RELEASE David Cox MP Shadow Assistant Treasurer

0214

BRACKET CREEP PETE - THE $17 BILLION MAN

In Question Time today the Treasurer denied that $17 billion of bracket creep is holding his budget surplus together this year and over the next three years (as I pointed out in my opinion piece in today’s Sydney Morning Herald).

If the Treasurer disputes Access Economics’ estimates of bracket creep he should make public Treasury’s alternative estimates of fiscal drag. I predict he will not do so because he would have to confirm Access Economics’ figures.

In Question Time today, the Treasurer had three lines of rebuttal.

The first was that I had incorrectly stated that the headline surplus in 2004-05 at $9.5 billion and 2005-06 at $9.7 billion.

My references in the article were net of Access Economics estimates of fiscal drag which are $5 billion for 2004-05 and $6.2 billion for 2005-06. If the Treasurer did the arithmetic he would find that the result of adding these estimates of bracket creep to the foregoing figures will exactly equal his MYEFO forward estimates of the headline cash surpluses of $14.5 billion in 2004-05 and $15.9 billion in 2005-06. This is not difficult arithmetic - it’s simple addition.

The Treasurer’s second complaint was that I had criticised the fall from 142% to 129% in the proportion of average earnings at which the top marginal threshold cuts in and said that it would not be so low had I not opposed a higher top marginal tax threshold.

His suggestion that I personally had stopped the top marginal tax rate from being higher is flattering but untrue. The actual tax thresholds in the final ANTS package were the product of a deal between the Coalition and the Australian Democrats in which the Labor Party had no part.

I - with the rest of the Labor Party - opposed the Government’s entire ANTS tax package that included an unfair redistribution of income tax and the regressive GST. He did not dispute that the top marginal tax threshold has fallen relative to average earnings - an admission by him that there has been significant bracket creep.

The Treasurer’s final defence was to suggest that I was advocating indexation of his tax scales. That is a total fabrication by the Treasurer. I do not support tax indexation because that would institutionalise the Treasurer’s own unfair tax scales.

CANBERRA 13 December 2002

Phone David Cox on o418 847 830 or Amber Hawkins on 0408 832 767