Treasurer Joe Hockey to push for reforms in personal tax system to boost jobs and stronger economy

On Monday, Treasurer Joe Hockey warned the Australians of risk lurking around with high personal income tax rates, which is believed to be the reason for low jobs and hindered economic growth.

Writing in The Australian , Hockey has provided an outline to examine the existing personal income tax system. He would be pushing for set a reform agenda in the next election.

Hockey is also set to cast light on Goods and Services Tax issues so that state revenue could be used to cover up the expenses needed for government services, thereby aiming to increase the consumption tax from 10 per cent to 15 per cent. He believed that the system should encourage “innovation and opportunity” and has again put GST reform on the table.

“We cannot afford to have a tax burden that stifles growth and costs jobs,” Mr Hockey writes in The Australian, setting aside the AU$185 billion income tax take.

On behalf of the coalition, he wrote that they don’t support spending taxpayers’ money and that they should indulge in finding ways to reduce it by spending it prudently. He said Labor’s approach towards spending of the taxpayers’ money was not something they were looking forward to.

While arguing that tax-system shouldn’t be perceived as an ever expanding funding mechanism, Hockey stressed on the importance of the structural arrangements of the system, which must work towards delivering services with efficiency and utmost efficacy.

He mentioned that reducing overall tax burden on the community is imperative for formulating a new tax system in the near future.

“We need a tax system that doesn’t hinder or limit our effort. We must seize the opportunity of the massive growth in Asia and harness the potential of the digital economy. The need for growth and development applies to traditional industries such as mining, where we enjoy a natural competitive advantage, and to the new industries of the future,” he wrote, emphasising on the need for a stronger economy.

He forecasted that within a decade, almost half of all taxpayers’ would be in the top two tax brackets as a result of the increase of the tax from 27 percent to 43 percent. He also highlighted that the effective marginal tax rate for some workers proved to be disincentive to continue working.

He believes that reducing personal income tax would help boost economic growth and create jobs. Solely relying on revenue from personal income tax is unwelcomed.

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