Stewart McArthur (Corangamite, Liberal Party) Share this | Hansard source

I understand that. Thank you. If we look at the tax system inherited from the Keating government, we see that the top tax threshold kicked in for an income of $50,000 compared with an income of $150,000 from 1 July 2006 under the Howard government’s budget proposal of 9 May. In the table, we can also see an across-the-board reduction in tax rates, meaning that Australians can now retain a higher percentage of their income after tax. These tax cuts will produce reductions in the taxation rates which will improve Australia’s competitiveness against other OECD countries. The 45 per cent top marginal tax rate plus the Medicare levy will be in line with the OECD average of 46.7 per cent. The increase in income level at which the top threshold is implemented will place Australia 10th in the OECD. That is recorded in the graph that I have incorporated in Hansard.

I have argued for many years that the tax rates in Australia were based on those in about 1960 when the higher tax rates were eight times average weekly earnings. With the impact of inflation since 1960, the highest tax bracket threshold got I think as low as 1¼ times average weekly earnings. These new measures mean that we are now back to a more reasonable position where the highest tax thresholds are three times average weekly earnings. I do not think anyone could argue with that. It is a reasonable position and is internationally competitive with other nations.

In the new tax rates from 1 July 2006 I particularly note the negligible tax rate of 15 per cent on $6,000 to $25,000 for lower income earners. From $25,000 to $75,000 it is 30c in the dollar. I note that 80 per cent of Australian taxpayers will pay only 30c in the dollar. For those earning higher incomes, $75,000 to $150,000, the tax rate is 40c in the dollar and those earning over $150,000 will pay 45c in the dollar. The rates are moving in the right direction. I commend the Treasurer and the government on making these changes after quite vigorous debate on both sides of the parliament. Even those opposite argued that some of the rates on overtime that hardworking Australians sustained were of a very high order, and that influenced the debate.

I would like to commend the budget for the allocation of $270 million to rail infrastructure. Personally I have taken a lot of interest in railway matters. I participated in the inquiry of the Standing Committee on Communications, Transport and Microeconomic Reform that produced the report Tracking Australia which looked at this whole debate.

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