Tax Reform

CareerOne's guide to work-related election policies

The Coalition | Labor | The Democrats | The Greens | Family First


The Coalition

Treasurer:Peter Costello

November 12: John Howard's $9.4 billion campaign launch includes the following:

* Up to $800 in tax refunds for the parents of high school students and $400 for primary school students for any education expenses, including private school fees.

* The 30 per cent childcare rebate to be paid directly to centres to reduce the upfront cost to parents.

* Tax-free home saver accounts to help people save for their first home. Contributions up to $1000 a year to the accounts will be tax-deductible from the 2008/9 financial year.

* Parents, grandparents and friends would be able to contribute a total of $1000 a year into home savings accounts for children. Savings would be accessible to buy a first home once the account holder turns 18.

Personal Income Tax reform plan
October 16, 2007: Prime Minister John Howard and Treasurer Peter Costello announce a $34 billion package of tax cuts, aimed at low and middle income earners staged over three years and worth $33.65 a week for someone on $50,000 a year; $20.19 a week for someone on $75,000, and $41.35 for someone on $100,000.

The tax cuts will start from July next year and will mean $20 a week for those on average earnings, rising to $35 a week by 2010.

What you'll get

^{The Daily Telegraph, October 16, 2007.}

For further information, read the government's Mid Year Economic and Fiscal Outlook.

Child Care Tax Rebate covers 30 per cent of out-of-pocket child care expenses for approved child care, with a rebate of up to $4,000 (indexed) per child, per year, for eligible recipients.

• Since 1996, the Coalition has more than doubled the number of approved child care places to 665,000.
• The Coalition claims there are up to 139,000 childcare vacancies on any given week day across Australia.
• Child Care Benefit increased in the last budget by 13 per cent and Child Care Tax Rebate has been made available to more families, sooner.
• The average family with a combined income of $60,000 pa using part-time child care for one or two children have up to 79 per cent of their fees subsidised through Child Care Benefit (CCB) and Child Care Tax Rebate.
• $2.1 billion boost into Child Care in the recent budget
• The Coalition introduced the "Baby Bonus" as a one-off payment of $4,187 for each child. It is usually paid as a lump sum and is not income or means tested.
• The government considers the bonus an alternative to paid maternity leave, which it argues benefits only working women.
• The Coalition claims the majority of families are "far better off" under its system of current subsidies. This includes a rebate of up to $4,211 per child per year, plus Child Care Benefit compared to the Labor plan of offering benefits via salary sacrificing and a Fringe Benefits Tax (FBT) exemption.

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Labor

Shadow Treasurer: Wayne Swan

Tax reform

November 4: Tax break for home buyers
By Lincoln Archer

Kevin Rudd has promised to set up special bank accounts to help first home buyers save for a deposit, offering tax breaks which he has said could help accumulate $3.5 billion if Labor wins the Federal Election.

Labor has identified housing affordability as one of the key economic issues of the campaign. Mr Rudd has said the plan would help young people get a foothold in the property market.

Read more from news.com.au

Main points of Labor's long-term tax plan announced October 18, 2007.

• $2.3bn for an education tax refund, allowing families receiving Family Tax Benefit A to claim 50 per cent of education expenses for up to $750 for each child attending primary school, and $1500 for each child attending secondary school
• Eligible items will include laptops, home computers, printers, home internet connection, education software and school text books
• $31bn in tax cuts matching the Government's plan but deferring cuts for those earning more than $180,000 per annum
• Reducing the number of personal income tax rates from four to three - 15 per cent, 30 per cent and 40 per cent - by 2013-2014
• 400m directed to a national health and hospitals reform plan in order to establish an elective surgery waiting list reduction plan
• $200 million to be retained in the Budget surplus

Read more

Child Care tax benefits:
October 21, 2007: Mr Rudd announces a 1.5 billion plan to boost the childcare tax rebate. If elected, a Labor government would lift the rebate from 30 to 50 per cent and pay it quarterly rather than annually.

The cap on the new rebate, which would come into effect on July 1 next year, will rise from $4300 to $7500. Jenny Macklin has said the initiative could attract up to 34,000 extra mothers back into the workforce.

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The Democrats

Spokesperson: Senator Andrew Murray, spokesperson for Taxation, Finance & Corporate Affairs

Five Pillars Taxation Reform Plan:

• Raising the tax free threshold
• Indexing tax rate thresholds
• Broadening the taxation base
• Reviewing and addressing negative tax - welfare interactions; and
• Lowering taxation rates and raising taxation thresholds

October 16, 2007: The Democrats welcomed the Coalition's belated acceptance of the Democrats argument for greater equity and workforce incentives in income tax.

"Again and again the Democrats have argued that the Coalition's income tax priorities have been skewed towards higher income Australians".

"Low income Australians needed most help," said Senator Andrew Murray.

Read more

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The Greens

Spokesperson: Senator Bob Brown, Leader of the Greens is the spokesperson for Treasury, Finance and Administration.

The Greens want "an equitable taxation system that generates the revenue necessary to fund public services at the appropriate level of government".

The Greens want to reduce inequities in the current personal income tax system including:

Reducing tax breaks for high income earners;

• Removing Fringe Benefits Tax concessions which promote increased use of motor vehicles;
• Removing the concessional arrangements for Capital Gains Tax;
• Abolishing the 30% Private Health Insurance Rebate in order to increase funding for public hospitals;
• Eliminating high rates of effective marginal taxation for those on welfare benefits.

  The Greens oppose the government's new tax cuts:

Greens Leader Bob Brown said the money should have been spent on health, education, tackling climate change or increasing the aged care pension.


Child care tax benefits
include:

• Reform CCB and FBT to address a person's ability to pay.
• Increase the benefit amount paid to low and middle income families;
• Replace the Child Care tax rebate with a "Child Care Benefit Guarantee".

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Family First

Spokesperson: Steve Fielding

Tax deductibility: Supports the provision of tax deductibility for school education expenses up to a limit of $3000 per year per family whether their child attends a public or private school.

Fielding said while his party welcomed the government's tax cuts, the government should have included a cut in petrol tax.

"Soaring petrol prices are the number one issue affecting families and small businesses and this just proves the government is out of touch with families struggling to make ends meet" Fielding said. (October 15, 2007)

Child care tax benefits
Annual Child Care Payment: Family First wants to see a new annual payment introduced of $4,000 to be given to all families with children under five. This would replace the Child Care Tax Rebate.

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