PRIME MINISTER'S WEEKLY BROADCAST ,3
THE NEW TAX SYSTEM
SUNDAY 24 AUGUST 1975
THE PART OF THE BUDGET THAT NATURALLY INTERESTS
US MOST AS TAXPAYERS IS THAT DEALING WITH INCOME TAX
REFORM, THERE WAS SO MUCH OF IMPORTANCE IN BILL HAYDEN'S
BUDGET LAST TUESDAY NIGHT THAT THE FULL SIGNIFICANCE
OF THE TAX REFORMS MAY EASILY HAVE ESCAPED YOU,
IT'S WORTH REFLECTING FOR A MOMENT ON JUST WHAT THESE
CHANGES MEAN, I HAVE NO HESITATION IN SAYING THAT BY
MEANS OF-THIS BUDGET WE HAVE BROUGHT ABOUT THE MOST
SWEEPING REFORM OF-THE TAX SYSTEM EVER MADE.
I HAVE NO DOUBT THAT TAX REFORM COULD PROVE ONE OF
ThE REALLY AACEHAIET-' YEMENTS OF THE LABOR GOVERNMENT
IN THE LCO'G RUN, AND FROM THE POINT OF VIEW OF JUSTICE
AND FAIRNESS FOR THOSE MOST IN NEEDS PERHAPS EVEN MORE
IMPORTANT 7-. AN iEDIBANK, 1,12 I
.1
2,
PRACTICALLY EVERY TAXPAYER IN AUSTRALIA WILL
BENEFIT FROM THE NEW SYSTEM. FAMILIES AT THE LOWER END
OF THE INCOME SCALE WILL HAVE MOST TO GAIN, BUT EVEN HIGHLY
PAID PEOPLE WILL BENEFIT AS WELL, THOSE WHO WORK HARDER TO
EARN HIGHER SALARIES OR EXTRA OVERTIME WON'T BE PENALISED FOR
THEIR EFFORT, THE MAJORITY OF AUSTRALIANS WILL PAY LESS TAX;
HALF A MILLION AUSTRALIANS WILL PAY NO INCOME TAX AT ALL.
MANY PEOPLE WON'T HAVE TO BOTHER ABOUT FILLING IN TAX
RETURNS, AND FOR EVERYONE ELSE THE TAX RETURN WILL BE MUCH
SIMPLER AND EASIER TO FILL. IN. THE WHOLE PROCESS WILL BE
FAIR AND JUST TO EVERYONE,
IF ALL THIS SOUNDS TOO GOOD TO BE TRUE, LET
ME EXPLAIN JUST HOW WE HAVE TACKLED THIS PROBLEM AND HOW
WE ARE SOL', : T T HE BASIC TROUBLE WITH THE TAX SYSTEM
IS THIS: 1~ HAS BEEN SEARED MORE OR LESS TO CONDITIONS
APPLYING 3 CR MORE YEARS AGO, IN 1950, SAY, A MAN EARNING
SIX THOUSAD CtLLARS A YEAR 3000 POUNDS WAS VERY HIGHLY
PAID; HE ~ 1 THE TOP INCOME BRACKET, THE TAX HE PAID THEN
WAS APPROPRIATE = CR A HIGH INCOME EARNER, BUT TODAY OF COURSE,
6000 DOLLARS PUTS A NAN IN THE TOP INCOME BRACKET;
YET THE ' AN C'N THAT :. CCME IS STILL BEING TAXED AS IF HE WERE
WEALTHY, . T: E .1 COE TAX SCALES JUST HAVEN'T BEEN ADJUSTED TO
TAKE ACCOUNT THE CHANGE IN MONEY VALUES AND OTHER CIRCUMSTANCES.
PEOPLE ON L3 CR MEDIUM INCOMES WHO WORKED HARDER TO EARN MORE
MONEY FOUND : ICST OF THE EXTRA MONEY GOING IN TAX. / 3
IT WAS THE SAME WITH REGULAR WAGE INCREASES THROUGH
AWARDS ON BASIC WAGE ADJUSTMENFS, MOST OF THEM
WENT IN TAX. IN FACT, IN ROUND FIGURES, EVERY ONE
PER CENT INCREASE IN EARNINGS LED TO A TWO PER CENT
INCREASE IN TAX RECEIPTS FOR THE GOVERNMENT, THIS
WAS CONVENIENT FOR THE GOVERNMENT BUT IT WAS PRETTY
TOUGH ON THE TAXPAYER, EVEN GOVERNMENTS THAT HAD FAR
LESS NEED OF PUBLIC REVENUE THAN WE DO WERE REMARKABLY
RELUCTANT TO CHANGE. THE SYSTEM,
THE OLD SYSTEM HAS BEEN DREADFULLY UNFAIR IN
ANOTHER W4AY, IT RELIED ON AN UNJUST SYSTEM OF
CONCESSIONAL DEDUCTIONS, -I WONDER HOW MANY OF YOU,
WHEN YOU .' EE CLAIMING YOUR SO-CALLED TAX CONCESSIONS
T-E VERY SJ-G6ES3TS O PATRONISING THE SYSTEM WAS
STOPPED TO T--INK THAT PEOPLE BETTER OFF THAN YOU WERE
GETTING MUC--IGHER CONCESSIONS FOR THE SAME EXPENSE.
PUT IT THIS WE ALL HAVE TO SPEND MONEY ON EDUCATION
EXPENSES, PL? E~ NUAT. I: AND OTHER THINGS; UNTIL
. ED3ANK., WE -AD TO SPEND MONEY ON HEALTH INSURANCE.
SCME OF US ST-' 30 DEPENDING ON WHAT STATE WE LIVE. IN,
BUT DEDUCT:' S FC? T. HESE EXPENSES UNDER THE OLD SYSTEM
, WERE WORTH MORE TO THE WEALTHY MAN THAN PEOPLE ON
LOWER INCOES. 3 QUITE LITERALLY, THE WEALTHY MAN WAS
PAYING LESS FC-THE THINGS WE ALL NEED, I OFTEN QUOTE
THE COMPARISGO BETWEEN ME AND MY CAR DRIVER. I EARN
PERHAPS FIVE TIMES AS MUCH AS MY DRIVER; WE BOTH NEED
INSURANCE AND WE HAVE BOTH HAD TO PAY EDUCATION EXPENSES
FOR OUR CHILDREN, WHY SHOULD I PAY, IN EFFECT, MUCH LESS
FOR THESE THINGS THAN MY DRIVER? / 4
THE WHOLE SYSTEM WAS GROSSLY UNFAIR, THE
WEALTHIER A MAN BECAME THE MORE HE WAS SUBSIDISED
BY POORER Y-t R TAXPAYERS. THE WEALTHIER A MAN
BECAME. THE ; KQRE HE WAS ABLE) AND THE MORE HE WAS LIKELY,
TO SPEND MONEY ON BIG INSURANCE POLICIES OR EXPENSIVE
EDUCATION FOR HIS CHILDREN, THE LIBERALS ACTUALLY
ENCOURAGED THIS SYSTEM, THEY MADE A VIRTUE OF
INCREASING THE ALLOWABLE CONCESSIONS, KNOWING THAT
THE PEOPLE TO BENEFIT WOULD BE THE RICH, AND THAT
POORER PEOPLE WOULD BE SUBSIDISING THEM, MR FRASER STILL
MOUTHS SLOGANS ABOUT FREEDOM TO SPEND OUR MONEY AS WE WISH,
OF COURSE WE SHOULD BE FREE TO SPEND OUR MONEY AS WE
WISH1 BUT WHAT REAL FREEDOM DOES A MAN HAVE TO SPEND HIS
MONEY WHEN A LOT OF IT HAS TO GO IN HEALTH, SUPERANNUATION,
HIGH TRANSPORT CHARGES AND EDUCATION EXPENSES
BECAUSE THE PU3LIC SERVICES PROVIDED IN THESE AREAS ARE
POOR OR HON-EXISTENT? THE OLD TAX SYSTEM WAS DEVELOPED
AND EXPANDED UNDER LIBERAL-COUNTRY PARTY GOVERNMENTS
THOSE WERE THE DAYS WHEN YEARS OF NEGLECT BY THESE
GOVERNMENTS ENSURED THAT DECENT HEALTH CARE AND EDUCATION
WENT ONLY TO THOSE WHO COULD AFFORD IT,
OUR SYSTEM WILL BE COMPLETELY DIFFERENT
AND MUCH SIMPLER AND FAIRER, YOU WILL DEDUCT YOUR
UNION DUES AND YOUR INTEREST CHARGES FOR HOME LOANS
FROM YOUR TOTAL INCOME ( AND I REMIND YOU THAT THOSE
HOME LOAN DEDUCTIONS ARE ANOTHER INNOVATION BY THE
LABOR GOVERNMENT)., THEN YOU DEDUCT FROM THE TAX
PAYABLE ON YOUR INCOME A FLAT AMOUNT A REBATE FOR
DEPENDENTS, EDUCATION, INSURANCE AND SO ON,. THE CRUCIAL
POINT IS THAT EVERYBODY'S ALLOWANCE FOR DEPENDENTS AND
EXPENSES WILL HAVE EXACTLY THE SAME-VALUE. THE
DEDUCTIONS FOR A WEALTHY MAN WILL BE WORTH EXACTLY
0 THE SAME AS THE DEDUCTIONS FOR ANYONE ELSE, IN THE
STUDIES EDRTOOK ON THE OLD TAX SYSTEM WE FOUND
THAT . OS~ TAXAY"' ERS WITH DEPENDENTS CLAIMED AROUND
) 150IN . E: LCTIONS, 80 WE HAVE ADOPTED THE SIMPLE
TACTIC OF GI: ING EVERYONE A REBATE EQUIVALENT TO THAT
AVERAGE DEDUCT: ON, THIS MEANS THAT ONLY THOSE PEOPLE
' HO ARE GOING CLAIM DEDUCTIONS WORTH MORE THAN
$ 13550 WILL BE *. SKED TO FILL IN THE DETAILS ON THEIR
TSA X FORMS.
I
FOR YEARS THE LIBERALS KEPT PROMISING* TO
REFORM THE TAX SYSTEM BUT THEY NEVER DID ANYTHING ABOUT
1T, SiR ROBER-r MENZIES PROMISLED IT IN 194,9 AND
AGAIN IN 1958. THREE WEEKS AGO EVEN MIR FRASER WAS
PROMISING SOME KIND OF REFORM. ALL THE LIBERALS
DID WAS INCREASE ALLOWABLE DEDUCTIONS AND MAKE THE
SYSTEM MORE UNFAIR, IT HAS TAKEN A LABOR GOVERNMENT
TO GET THE SYSTEM CHANGED, IN ONE SWEEP, WE ARE
PUTTING AN EXTRA $ 5 A WEEK AND iNORE IN THE PAY
PACKETS OF AROUND THREE MILLlo . jAL ISTRALIANS ON AVERAGE
INCOMES; WE ARE ELIMINATING TAX ALTOGETHER FOR HALF.
A MILLION AUSTRALIANS ON THE LONEST INCOMES; VIE ARE
GIVING TAX RELIEF TO 100,000 loilli-JOWS AND UNMARRI ED
S LIP? -: iG ' CN, AND Wc: ARE EAS I NG THE
p 7I N G ' TAX 7=_ S ON ililDDLE-INCOME: EARNERS WHICH HAVE
DISCOURAGED ARNING MORE. ' 4E HAVE SIMPLIFIED
THIE ' vIHOLE Clu',' 3ERSCME BUSINESS OF FLLING IN
CO, 1.1 D C A TE_ Di S COUNT IT A GREAT ACHIEVEMENT THAT
IN BRI," IGING JDC". 4-N B U D GET TO TACKLE INFLATION WE HAVE
TO R 5: = 0 D-t 1-H E TA X SYSTEM SO RIADICALLY
NANAGED ND
CR EAT E TH E CC11ND T-ONS FOR A F1A1% IRER AND MORLE JUST SOCIETY.