Day one of Campaign ’07 saw the Government getting on the front foot early with the announcement of its tax policy by the Prime Minister and Prime Minister in Waiting (who currently holds down the Treasury portfolio).
Pundits praised the move as tactically shrewd. Momentum was the Government’s. There was even an inkling in the polls that things were beginning to turn for John Howard and his team.
So what, exactly, does each tax policy have in common and what will each do with the money that never sees the inside of your pocket? Crikey’s tax policy comparison gives you the broad strokes…
Treasurer Peter Costello’s Press Release of 15 October 2007 outlines the Government’s tax policy in full. Here are the main points:
- $34 billion worth of tax promises over three years, with two more years of uncosted tax reform goals;
- Increasing targets over three years to deliver, by 2010, a tax free threshold of $16,000; a 30% threshold increased to $37,001; and the cutting of the top two marginal tax rates to 37% and 42% respectively;
- Tax cuts to deliver a cut of around $20 per week to a person currently on average weekly earnings from 1 July 2008 rising to around $35 per week from 1 July 2010;
- A reduction of the fringe benefits tax rate in line with reductions in the top marginal tax rate (including the Medicare levy), to 44.5% 1 April 2009 and to 43.5% from 1 April 2010;
- Targets to deliver the following by 2013:
- An enhanced low income tax offset that will mean that low income earners will have an effective tax free threshold of at least $20,000;
- A rate scale of 15%, 30%, 35%, and 40%;
- Forty-five per cent of taxpayers facing a marginal tax rate of 15% or less;
- Eighty-five per cent of taxpayers facing a marginal tax rate of 30% or less; and
- Ninety-eight per cent of taxpayers facing a marginal tax rate of 35% or less.
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Kevin Rudd and Wayne Swan held a press conference to outline Labor’s tax plan on October 19. The major points are:
- $31 billion worth of tax promises over three years with the $3 billion dollar difference (compared to the Government’s tax policy spending) to be spent on an Education Tax Refund ($2.3 billion), a plan to reduce hospital waiting lists for elective surgery ($400 million), and a plumping of the budget surplus ($210 million).
- The “50% Education Tax Refund” would allow families to claim up to $750 for primary school children ($375 per child max.) and $1500 for secondary school children ($750 per child max.) on educational items including computer hardware, software and peripherals, internet connections and school text books.
- A six year tax reform plan to reduce the number of tax rates from four to three by 2013.
- Apart from for people earning over $180,000 (for taxpayers earning over that sum, the reduction in the top tax rate from 45% will be deferred), Labor’s tax thresholds goals are the same as the Coalition’s.