Monday, October 15, 2007

The 2007 election is on. .The Liberals finally offer tax cuts !

The Liberals have finally come about their senses and planned for some decent tax cutting ! Its about bloody time they put this issue on the radar. Forget their past mistakes, we all know Liberals have failed to deliver much in terms of tax cuts, and tax revenues have continued to climb to record highs under Howard's leadership.

But now that tax is a major election issue, it will force Rudd to deal with it and either offer his own set of substantial tax cuts or admit that he is a thieving, tax hungry socialist.

Past tax cuts have ranged from negligible to decent, but this is some solid change coming up, and worthy of celebration. I'd call it a big deal. Of course, it doesn't go as far as I'd like, but reducing the 2 top tax rates is a good start. Lets hope they no longer exist and everybody fits into the 30c rate, or lower.

For the kind of basic functions I think government should perform (police, courts, defence and some infrastructure/roads), we could afford all these things without an income tax at all !

But enough of my ranting for now, here are the details:

Mr Costello said in 2010 a coalition government would increase the effective tax free threshold again to $16,000.

The 15 per cent threshold would be taken up to $37,000, he said, and the top and second top tax rates would each be cut by one cent in the dollar.

"This plan is all to work towards the goal of tax reform which we now set ourselves," the treasurer said.

"Within five years - by 2012/13 - (we'll have) four tax rates - 15, 30, 35 and 40 (cents in the dollar).

"That's why we keep reducing those top two tax rates."

Mr Costello said the tax restructure would help grow Australia's economy by encouraging more people into work.

"The reason we are doing this is to encourage more people to join the workforce and to boost the capacity of the Australian economy," he said.

"This is part of our 'go for growth' strategy."

Treasury modelling showed federal government tax reforms since 2000 had boosted the number of people in the workforce by 300,000.

"The changes which we announce today will boost the estimated workforce by around 65,000 people," Mr Costello said.

"Encouraging more people into the workforce, particularly by reducing their effective tax-free threshold and particularly by lifting the threshold up until which you pay 15 cents in the dollar, is boosting the number of people joining Australia's workforce."

Mr Costello said in percentage terms, low income earners had experienced the highest tax cuts over the past five years.

"For people on $15,000 we will cut it out entirely," Mr Costello said.

"For people on $50,000 they will have a net tax cut that will reduce their tax paid from around $11,380 to $7,850.

"These tax cuts which began with the new tax system in 2000 have continued through our last five budgets."

Mr Costello said if re-elected, the coalition would next financial year lift the tax-free threshold for low income earners from $11,000 to $14,000.

The 15 per cent tax rate would kick in at $34,000, instead of $30,000.

Mr Costello said taxpayers would pay 30 cents in the dollar once they earn $80,000 a year and 40 cents at $180,000.

Lower those rates, Mr Treasurer !!