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EMBARGO: 7.00 p. m.
For Press 21 August 1977
ELECTORATE TALK
The Goverrnent's second Budget delivered by the Treasurer last
week is a Budget of real reform. It continues with the great
reforms we commenced last year. It recognises that people want
to be able to make decisions that affect their own lives, and
that they want freedom to choose.
At the same time, the Budget gives reality to our complete
commitment to help those mnost in need. Our tax reforms offer
renewed hope for millions of Australian men and women burdened
by the yoke of crippling taxation on their incomes.
Make no mistake, my Government's tax reforms are the greates-t
single reform of our tax system ever introduced by any Government
in this country. This reform with its new system of tax
calculation, rewards initiative, provides incentive and taxes
fairly. This is precisely what a tax is supposed to do.
My Government has always maintained that the present personal tax
system hits too hard at the pay packets of all Australians.
We have been one of the highest taxed nations in the world.
We have admitted this fact but we have also done something
about it.
Last year we introduced tax indexation, which stopped governments
taking an even larger share of incomes simply because of infiation.
We stopped this unlegislated tax grab by Canberra. That was the
first step. Now we have introduced a three-tiered standard rate
of taxation, that will start from February 1.
This system is one of the most a'i1vanced. in the world. Principally,
it means that nearly 90 percent of taxpayers will pay only 32 cents
standard rate of tax. For a person on average earnings of about
$ 10,000 there is a built-in incentive to earn another $ 6,000
either in salary or overtime without being forced into a higher
tax bracket. Three typical weekly salary rates demonstrate the
savings from tax indexation and our new reform.
The taxpayer with dependent spouse, earning $ 140 a week, will save
$ 4.87 a week. The same taxpayer earning $ 200 a week will save
$ 6.67 a week, while the taxpayer earning $ 280 a week will save
$ 15.33 a week.
Despite the tactics of the Labor Party to deliberately confuse
the community on the extent of this reform, the plain fact remains
every Australian taxpayer will be better of.
The actual cost to myGovernment in lost revenue of our tax reforms
in this financial year will be more than $ 1300 million. That is
made up of full tax indexation, costing $ 965 million, and the new
reform from February 1, costing another $ 406 million.
This is not a sleight-of-hand or a fiddle, as Labor claims
it is the real benefit to taxpayers. The cost of our tax reforms
in the following financial year ( 1978-79) will be $ 1800 million.
This is made up of $ 467 million which is the cost of half indexation,
and $ 1390 million which is the cost of the tax reform fo. that
financial year.
That is nearly a $ 1000 million additional benefit to
taxpayers over and above that which they would get from full
indexation of the old rates.
Clearly, Labor are not too delighted about my Government being
able to introduce remarkable tax reform within just two years of
being elected. That's exactly why they now seek to muddy the water.
They will fail, because from February 1 next year, every Australial.
will receive the benefit of the new tax system, as well as tax
indexation. Nothing Labor says will alter that.
We were only able to undertake tax reforms because we have
kept Government expenditure restrained and under tight co-' trol
for two successive years. We have shown Australians that
governments have to make real choices between expenditure on their
own accounts, and providing tax relief for individuals.
The Government's great tax reforms have maintained our commitment
to help people in need. Benefits to individuals have been fully
nrotected. Not a single cent has been cut from any benefit
paid to any individual under our social welfare programmes.
Indeed, many payments have been substantially increased.
The Budget is a budget of genuine reform. The Government h-is
introduced historic tax reform, maintained our commitment ;: o
those in need, and at the same time has framed a Budget will
cont: inue the relentless task of bearing down on inflatior.