The key problems in personal income tax are excessive marginal rates and an increasing overall average tax rate as bracket creep goes unchecked. Political objectives aside, there is a sound economic case for tax cuts. The government should give priority to instituting a system of automatic annual indexation of bracket thresholds to average wages and to cutting marginal rates. Going further, more ambitious reform options should be considered, such as abolishing the tax-free threshold in order to cut marginal rates; curbing deductions; and removing distortions in taxation of personal saving. Large income tax cuts are very costly to revenue and the scope is limited over the next few years by the pressing need to bring the budget back into balance and in the longer term by upward pressure on public spending. This constraint reflects the failure of successive governments to wind back expenditure from bloated levels. A more disciplined approach to public spending provides the key to larger medium-term income tax cuts. Until that happens, personal income tax relief is likely to be modest and do no more than check the rising trend in the average tax rate.
Cutting income tax: can we add the bacon to the hamburger and milkshake tax cuts?
15 April 2018 | PP1
02 December 2019 | PP27
Religious tolerance is vital for a well-functioning secular democracy. The ability to tolerate even undesirable ideas ensures harmony. In order to determine the attitudes of Australians towards religion, the Centre for Independent Studies commissioned YouGov Galaxy to poll more than 1000 Australians, with the data weighted by age, gender, and region, and also according to the religious affiliation question posed…READ MORE
20 November 2019 | PP26
Educational freedom and proper use of resources are both crucial in producing the best outcomes for school students. This paper provides an insight into parental perspectives of the current state of school choice and resourcing. The research results reveal the areas of importance to parents and how they and their children could be better served by our education system. The…READ MORE
13 November 2019 | PP25
Antisemitism is on the rise in many Western countries. On the postmodern left, this ancient hatred is often expressed as anti-Zionism which claims to be opposed to racism and colonialism. Yet because anti-Zionist discourse is an attack on the right of the State of Israel even to exist, it also antisemitic. This is because it denies both the very concept of…READ MORE
15 October 2019 | PP24
Treasury modelling of the government’s tax changes make the strange assumption of no behavioural change, leading them to ignore economic efficiency and overestimate the revenue implications. Proper modelling provides crucial further information: The Low-Middle Income Tax Offset (LMITO) does nothing to improve economic efficiency and will cost about 10% more than expected. The long-term structural tax reforms scheduled for 2022…READ MORE
24 September 2019 | PP23
In the 1980s and 90s, Australian governments agreed to an ambitious program of micro-economic reforms to lift industrial productivity and living standards that had languished in the 1970s and 1980s. Most economic attention on that era has focused on federal government initiatives such as further reducing import tariffs, floating the Australian dollar, exposing local banks to foreign competitors, deregulating the…READ MORE