Media Statement - 18th October 2007
A Rudd Labor Government will reform Australia’s tax system and introduce a 50% Education Tax Refund for working families supporting their children’s education.
This $2.3 billion Education Tax Refund builds on Labor’s Education Revolution - a core part of Labor’s strategy to drive Australia’s long-term economic prosperity.
Labor’s plan includes the goal over 6 years, by 2013-14, of flattening Australia’s income tax system by reducing the number of personal income tax rates from four to three – with a personal income tax scale of 15 per cent, 30 per cent and 40 per cent.
This plan will deliver assistance to working families under financial pressure and help prepare Australia for its future economic challenges.
This is a course of action for Australia’s long-term national interest – rather than a short term political decision by a government that has had 11 and a half years to fundamentally reform the tax system.
Labor’s tax plan is designed to maximise individual incentive, enhance workforce participation, improve our international tax competitiveness and invest in Australia’s future.
Under our plan:
- Labor confirms its decision in May 2007 to support the tax cuts outlined in the 2007-08 Budget.
- Labor will provide tax cuts of equal value to those proposed by the government for individuals earning up to $180,000 per year. This is set out in the attached tables.
- Labor will defer the Government’s proposed tax cuts for those individuals earning more than $180,000 per year - saving around $3 billion over the Forward Estimates.
- Labor will direct $2.3 billion of this amount to an Education Tax Refund for all families receiving Family Tax Benefit A with children at school. This will benefit the education of around 2.3 million Australian school children.
- Labor has a goal for a tax system with the explicit objective of maximising incentive in the future economy.
- Labor has a goal over six years, by 2013-14, of flattening Australia’s income tax system by reducing the number of personal income tax rates from four to three – with a personal income tax scale of 15 per cent, 30 per cent and 40 per cent.
Labor will also direct a further $400 million to build on Labor’s National Health and Hospitals Reform Plan.
This money will be used to negotiate an agreement with the states and territories on a specific timetable for the significant reduction of elective surgery waiting lists.
The objective of this agreement will be to reduce to zero the number of people who wait for procedures for longer than the clinically recommended time.
The remaining $200 million will be retained in the budget surplus.
Labor’s Tax Plan for Australia’s Future is mindful of inflationary pressures in the economy; responsibly commits to a goal for tax reform that will boost productivity and workforce participation; targets investment in education and health to build future economic growth; and returns a further $200 million to the budget surplus.
Investing in the Education of our
Children
A Rudd Labor Government will invest $2.3 billion in financial support
for working families to help
meet the growing costs of educating
their children.
Federal Labor will provide a new 50% Education Tax Refund to help families of around 2.3 million school-age children meet the costs of education.
Under Labor’s Education Tax Refund, eligible parents will be able to claim:
- A 50 per cent refund every year for up to $750 of education expenses for each child attending primary school (maximum $375 per child, per year).
- A 50 per cent refund every year for up to $1,500 of education expenses for each child attending secondary school (maximum $750 per child, per year).
- Therefore a typical family with a primary school aged child and a secondary school aged child would receive a tax refund of up to $1,125 per year.
All families who receive Family Tax Benefit (Part A) will be eligible for Labor’s new 50 per cent tax refund for education expenses. Families would submit their application for this refund as part of their annual tax return.
Eligible items will include laptops, home computers, printers, home internet connection, education software and school text books.
This measure is designed, together with other measures in Labor’s Education Revolution, to lift school retention rates long-term – where Labor’s target is to increase year 12 equivalent retention to 90 per cent by 2020.
According to research by the OECD, the growth rate of the economy would be up to 1 per cent higher if the average education level of the working-age population was increased by one year.
A tax cut for all Australian taxpayers by July
2008
Labor’s tax plan will build a stronger
foundation for Australia’s future
economic growth while delivering for
working families
Labor will deliver tax cuts for all taxpayers from 1 July 2008. These tax cuts are part of a broader plan to reform the Australian taxation system.
Labor’s tax plan will provide tax cuts of equal value to those announced by the Howard Government for people earning up to $180,000.
Under Labor’s plan, for taxpayers earning over $180,000, the reduction in the top tax rate from 45 per cent will be deferred and form part of Labor’s six year goal to flatten the tax system.
Labor’s six year goal to reform Australia’s tax system
Australia needs a clear destination point for the future of
its tax system – not just the
incremental adjustment to thresholds which the current
government has specialised in either
at budget time or election
time.
Real tax reform lies in flattening the system by reducing the number of rates and reducing rates themselves.
Labor’s Tax Plan for Australia’s Future sets a goal over six years, by 2013-14, for a personal income tax system with the following features:
- A reduction to three rates from the current four.
- A reduction of the current 45 per cent rate to 40 per cent.
- A reduction of the current 40 per cent rate (which by 2010-11 would have been reduced to 37 per cent) to 30 per cent.
Consistent with the Government’s plan, the effective tax free threshold would increase from $11,000 to $16,000 through an increase in the Low Income Tax Offset by 2010-11 and then increase to $20,000 through an increase in the Low Income Tax Offset by 2012-13. Labor will adjust the Senior Australians Tax Offset (SATO) in line with the adjustments outlined by the Government.
Under Labor’s Tax Plan for Australia’s Future, reductions in the fringe benefits tax (FBT) will reflect reductions in the top marginal tax rate.
Middle-income earners would be the major beneficiaries of Labor’s six year tax goal – with only a 30 per cent marginal tax rate applying over the full income range from $37,000 to $180,000.
Achieving this six year goal will depend on national and international economic conditions and maintaining, as a general economic principle, budget surpluses of around 1 per cent of GDP.
Cutting waiting lists in our public
hospitals
Labor will direct a further $400
million to build on Labor’s National
Health and Hospitals Reform Plan in
order to establish a $600 million
Elective Surgery Waiting List Reduction Plan.
This $600 million Elective Surgery Waiting List Reduction Plan will enable the Commonwealth to drive down elective surgery waiting lists across Australia.
Labor will negotiate an agreement with the states and territories on a specific timetable for the reduction of elective surgery waiting lists and hold the states accountable.
Labor’s objective is to reduce the number of people who wait longer than the clinically recommended time for elective surgery in critical categories.
Labor will:
- Invest $100 million in 2008 to conduct an immediate national blitz on elective surgery waiting lists – to help clear the backlog of people who have been waiting longer than the clinically recommended time for elective surgery such as hip replacements.
- Invest $200 million over two years to make systemic improvements to Australia’s hospital system to improve elective surgery throughput in the long-term, including the construction of additional day surgery clinics.
- Invest up to $300 million in dividend payments to those States and Territories that meet elective surgery waiting list reduction targets within the clinically recommended time by the end of Labor’s four year plan.
Fiscal responsibility
Federal Labor’s Tax Plan for Australia’s Future is
underpinned by an economically
conservative approach.
This proposal is mindful of inflationary pressures in the economy. It responsibly commits to a goal for tax reform that will boost productivity. It targets investment in education and health to build future economic growth, productivity and workforce participation.
And it returns a further $200 million to the budget surplus.
NOTE: THE TABLES BELOW ARE ALSO AVAILABLE AS PDFs UNDER DOWNLOADS ON THIS PAGE.
FEDERAL LABOR’S TAX PLAN FOR AUSTRALIA’S FUTURE
