Tax changes attacked

Press, 19 August 1983, Page 5

Tax changes attacked

Parliamentary reporter Provisions in a bill for income-tax cuts announced in the Budget were attacked by Labour yesterday as compensating only a fraction of the people whose income had fallen during the wage-price freeze.

The Associate Minister of Finance,- Mr Falloon, said that by increasing the family rebate the Income

Tax Amendment (No. 2) Bill would compensate low income families who had carried a “disproportionate share of the economic burden.”

But Labour’s associate finance spokesman, Mr D. F. Caygill, said the bill would not help people on low incomes. “It’s a bill that helps about a quarter of those who have been hurt by the Government’s measures,” he said. As well as raising the family rebate from $1404 to $1924 a year, the bill contained other budgetary and non-budgetary measures relating to personal income tax. These included increasing the standard marginal tax rate from 31c to 31.5 c. Mr Falloon said this was to finance the new family rebate.

The Minister of Finance, Mr Muldoon, said that the

family rebate would give lower paid workers much the same rise in income as that demanded by the Federation of Labour in its $2O a week campaign. It had the advantage, however, of not fuelling inflation by adding to costs, people who did not need them.

Mr Falloon said the bill provided for people in de facto relationships to get the same rebates on rates and first home mortgage interest rates as legally married people. The Government had received complaints that present legislation discriminated against couples living in permanent de facto marriages, he said. Although Labour argued against some of the bill’s provisions, it did not vote against the bill’s introduction.

The Government also introduced the Income Tax

(Annual) Bill, which will fix the rates of income tax at the rates contained in the Income Tax Amendment (No. 2) Bill.

“It is far better for the lower paid worker to get it this way than the way the poor old F.O.L. was trying to get it for them,” Mr Muldoon said.

Mr Caygill said the bill only cut the tax of people on low incomes who had children. Most other low income earners would pay more tax.

The increase in the standard marginal rate meant that 85 per cent of income earners would pay more tax, while 15 per cent would see their tax cut insignificantly. “This is the way we cover an appalling deficit, by increasinng the tax for 17 people out of 20,” he said. The present “astronomical” deficit had been caused by last year’s tax cuts, which had gone to the