F78/ 222
EMBARGO: 7 .00 p . m.
FOR PRESS 29 OCTOBER 1978.
ELECTORATE TALK
This Government's record of tax reform a tax reform that is
soundly based is second-to-none. It stands any structiny.
It passes any test.
For many years Australian taxpayers have been hit to leg because
inflation pushed them into higher tax brackets. This cut their
earnings and boosted the tax flow to Canberra.
That situation was not acceptable to the Coalition Government.
Within months of gaining office, we acted decisively to end
Labour's tax rip-off. We acted to stop the unlegislated tax
grab by Canberra.
We introduced tax indexation. This is a device that automatically
protects incomes against tax increases caused by inflation.
Last year we went further. We introduced what has been described
as the most significant tax reform in Australia's history.
We cut the tax rates and introduced a new and simplified
three-tier tax scale. Now, for the first time in 10 years, the
personal income tax collected by thne Government will fall in real
terms.
The Government's tax reforms have made sure that taxpayers today
pay less than they would be paying if Labor had remained in office.
Even allowing for the impact of the 1.5 percent surcharge that
will come into effect this week, until June 30 next year
taxpayers are still paying less tax than they would be if the
so-called Hayden tax scales still applied. But on top of that,
taxpayers also benefit from the simplified health arrangements
that also start from this week. These have resulted in lower
health insurance contributions.
The facts are clear. Let's look at a taxpayer with a spouse and
dependent child on average weekly earnings of $ 220.38.
Under Labor's 1975 Budget tax scales, in January next year, that
taxpayer would be paying tax of $ 49.85 per week. Under this
Government., he will be paying only $ 40.85 a week and this
includes the 1.5 percent temprorary tax surcharge.
Accordingly, despite the surcharge, the taxpayer on average weekly
earnings is $ 9 a week better off because of this Government's tax
reforms. This figure takes no account of the family allowance
scheme which provides mothers with significantly higher benefits
than the old child endowment. / 2
2.
The Government's tax reforms even with the surcharge benefit
taxpayers on all levels of income. A non-levy taxpayer with
depandent spouse earning $ 100 a week was paying $ 7.85 a week
in January 1976 when Labor's tax scales were still operating.
Now, the taxpayer on $ 100 a week pays no tax. The same taxpayer
earning $ 150 a week in January 1976, was paying $ 25.60 a week in
tax. Now,, he pays $ 16.30 a week. That's a difference of
$ 483.60 a year. The same taxpayer earning $ 200 in January 1976
was paying $ 44.50. Now he pays only $ 33.85. That's a difference
of $ 553.80 a year. That taxpayer earning $ 300 in January 1976
was paying $ 91.70 in tax. Now he pays only $ 68.95. That's a
difference of $ 1,183 a year.
The significance of this Government's tax policies and economic
strategy is highlighted by comparisons with the tax grab made
during the high inflation period of the last Federal Labor
Government. In 1972-73, the Labor Government collected
$ 4,089 million in income tax from all Australians.
The following financial year this rose to $ 5,490 million a massive
20.1 percent increase in real terms. In 1974-75 still under Labor
the tax grab rose to $ 7,714 million a further 19.9 percent increase
in real terms.
What a stark picture. It represents an 89 percent increase in tax
collected by Labor in two years or 44 percent in real terms.
This year, the Government has reversed that disastrous trend and
is actually reducing our takings by 0.3 percent in real terms
this is equivalent to $ 36 million.
Next Wednesday, when the temporary tax surcharge comes into effect,
Australians also will be covered under a new health care arrangement.
There's no doubt that our decision to simplify health care
arrangements will provide real benefit throughout the-commnunity.
It is a fundamental aim of the Government to provide a high standard
of health care, for all Australians and at reasonable cost.
It's worth recalling how the original Medibank scheme
Medibank Mark I worked. In essence the original Labor scheme
worked on the principle of providing health services to everyone,
without charge. In practice, it is not that simple.
By providing all services without charge or at a nominal charge
Government expenditures increase dramatically. To finance these
services in a non-inflationary manner, it is necessary to either
increase taxes or restrict spending in other areas. The point is
worth dwelling on. The major beneficiaries of Medibank Mark I
were not the poor. Pensioners and their dependents were already
eligible for free health care. Poorer families had their health
insurance premiums subsidised. The beneficiaries were the better
off members of the community Cho no longer needed to pay insurance
premiums. When we came to Government, late in 1975, the increasing cost of
Medibank was clear. If something had not been done we would have had
to either increase taxation or cut back in other health and
welfare programmes. 3
In other words, the gains of Medibank Mark I to the better off
would have been financed at the expense of the poorest sections
of the community. We were not prepared to see that happen.
We modified Medibank, slowed the escalation in overall health
care costs and protected that section of the community not
as well off. The latest changes built on this achievement.
They continue to protect the disadvantaged. They protect all
Australians against the costs of serious illness, and they
simplify present arrangements. At the same time, they require
those better off in the community to take a greater degree of
personal responsibility for the costs of their health services.
Through our taxation reforms and we have proved we are a tax
reform Government and our health care programme, this
Government continues to demonstrate its concern for the welfare
of all Australians.