Treasury Laws Amendment (Untainting Tax) (National Disability Insurance Scheme Funding) Bill 2017


25 OCTOBER 2017

I move the opposition amendment circulated in the name of the member for McMahon:

(1) Schedule 1, page 3 (after line 3), before item 1, insert:

1A Subsection 4 ‑10(3) (note 2)

Omit "of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary", substitute "(which is about the".

1B After section 4 ‑10


4 ‑11 Budget repair levy

Budget repair levy

(1) Extra income tax is payable for a financial year (budget repair levy) if:

(a) you are an individual; and

(b) your taxable income for the corresponding income year exceeds $180,000; and

(c) the financial year is a budget repair levy year.

Amount of budget repair levy

(2) Your budget repair levy is worked out by reference to your taxable income for the corresponding income year using the rate or rates that apply to you.

Note: See Part IV of the Income Tax Rates Act 1986.

Interaction with other provisions

(3) For the purpose of working out your income tax for the financial year:

(a) section 4‑10 has effect as if it made you liable to pay the extra tax mentioned in subsection (1) of this section; and

(b) subsection 4‑10(3) has effect as if step 4 of the method statement in that subsection were omitted and the following were substituted:

Step 3A.Subtract your tax offsets from your basic income tax liability.

For the list of tax offsets, see section 13‑1.

Step 3B. Add the extra income tax you must pay as mentioned in subsection 4‑11(1).

Step 4. If an amount of your tax offset for foreign income tax under Division 770 remains after applying section 63‑10, subtract the remaining amount from the result of step 3B. The result is how much income tax you owe for the financial year.

(4) To avoid doubt, budget repair levy is not included in your basic income tax liability.

Note: As a result, you cannot apply any tax offsets against budget repair levy under Part 2‑20 (apart from the foreign income tax offset applied under step 4 of the method statement in subsection (3)).

Meaning of budget repair levy year

(5) Each of the following is a budget repair levy year:

(a) the 2017‑18 financial year;

(b) each financial year after the 2017‑18 financial year, until the Parliament otherwise provides.

While we are constitutionally barred from actually reinstating the budget repair levy, this amendment puts in place the legislative framework for so doing. As I noted in my earlier contribution, the House faces two choices as to how the budget might be repaired, with the Treasurer having taken gross debt through the half-trillion-dollar mark. The choice is between raising taxes on low- and middle-income Australia or reinstating the same tax rate that prevailed under Tony Abbott. The Liberal Party would have you believe that it is socialism to put in place the same tax rate that Tony Abbott put in place. Labor takes a different view. Labor's view is that it is appropriate, at a time when inequality is as high as it's been in three-quarters of a century, to ask those at the top to pay their fair share.

I won't repeat the statistics on rising inequality in Australia, which thoroughly debunk the Treasurer's claim that inequality is getting better. But the question we have before us is whether the House should continue with the plan that the government announced on budget night, which the Parliamentary Budget Office estimates would see the largest increase in average tax rates for people in the middle income quintile—they're people earning an average of just $46,000—or whether it's appropriate to put in place the same tax rates that prevailed under the first couple of years of the Abbott government.

The Treasurer would say that you can't do this because it's a tax on success. This reflects everything that the Liberal Party stand for. They on that side of the House think that success is about money. They think it's about how many mansions you've got or how many jet skis you've got. We on this side of the House think that a teacher earning $70,000 who is looking after kids and turning their eyes to the love of learning is a success, even though they're not in the top tax bracket. When we look at a police officer who is keeping our streets safe and earning maybe $65,000, we think that person is a success. When we look at the childcare workers—those who are there looking after our kids, not just babysitting but engaging in active early childhood education of the most vital kind—who are earning maybe $45,000 a year, we think those people are successes. We think those Australian families raising their kids with love, those union representatives out there trying to get a better pay deal for Australian workers, those families looking to pay the mortgage—in an environment in which housing affordability is as low as it's been in six decades—are a success.

Labor has nothing against the top two per cent of Australian adults who find themselves in the top tax bracket. Labor has nothing against the top one per cent of Australian adults who pay nine-tenths of the tax in that top tax bracket, but it has been a very good generation for the top one per cent, a generation that has seen them nearly double their share of national income. When the Treasurer says that it would put us out of step with other countries, were we to go back to the marginal tax rate that we had under the Abbott government, you simply have to look at OECD data. A fact check done by Kathrin Bain for The Conversation on 19 May found that Australia's highest marginal tax rate ranked us 13th among 34 OECD members, meaning that 12 OECD members have a higher top marginal tax rate than Australia.

The top one per cent can afford to pay a little more. It is better for the budget. It is better for fairness. It is the right decision for an Australian economy where consumer confidence and growth is still too fragile. Low- and middle-income Australians spend their pay cheques; they put that money straight back into the economy. Those at the top have higher savings rates, and so tax cuts given to them don't flow through to consumer expenditure. This is the right solution for fairness, the right solution for growth, and I urge this amendment upon the House.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.