Like last time, Peter Costello has done it again in his 11th budget. Personal tax cut for all, well, almost all workers anyway. Here's the new rates:
|Current||New from 1st July 2006
|Income thresholds ($)||Tax rate (%)
||Income thresholds ($)||Tax rate (%)
|0 - 6,000||0
||0 - 6,000||0
|6,001 - 21,600||15
||6,001 - 25,000||15
|21,601 - 63,000||30
||25,001 - 75,000||30
|63,001 - 95,000||42
||75,001 - 150,000||40
Bold types are the changes. If you want executive summary, i.e. you can't read tables,
- Top 2 thresholds have been reduced to 40% and 45%.
- Top 2 thresholds have been lifted to $75,000 and $150,000.
- Other than the tax-free threshold, all others have been lifted.
In summary, you will get paid more even if you haven't receive a pay rise. Especially the very high income earners. And now the top band has twice as much threshold as the second band, it really limits the number of people who can potentially be up there.
Nothing changes to company rate, and it stays fairly high at 30%. Expect foreign investment to stay limited.
Oh yeah! Everyone loves tax cuts, but the question is -- is it the right thing to do for the Australian economy?
It is probably offset by recent rate raise and raising petrol prices. According to this SMH article this morning, it might also give each individual a false sense of wealth, which might also drive up inflation and more rate raise. Moreover, when the government focused on only personal tax (instead of company tax), we got to ask why? Is election around the corner yet?
I agree Australia needs a lot of money elsewhere to boost its infrastructure, to create more opportunities, to provide more affordable education, etc. It is great that the government has lots of surplus due to booming mining industry. Put them into places that will help this country in long run, than making each tax payer a little bit more self-fulfilling in a short little while. Especially when more income does not bring more happiness.