Joe Hockey announces plans for personal income tax cuts

Federal Treasurer Joe Hockey justified the need for personal income tax cuts in a speech on Monday, which, according to him, will have a negative impact on the economy if not addressed immediately.

“Unquestionably bracket creep is holding people back,” Mr Hockey told reporters after addressing a Tax Institute and Chartered Accountants of Australia and New Zealand conference in Sydney on Monday. According to him, income tax brackets haven’t been adjusted according to the changes announced by the Howard government back in 2007, and if nothing is done to restore the balance, around 300,000 Australians would head into the second-highest tax bracket.

“And in 10 years, if tax cuts don't happen, almost half of all taxpayers will be in the top two tax brackets, a jump from 27 percent to 43 percent,” Hockey said in his speech. He also said that it is possible for the small businesses to receive tax cuts up to AU$5 million alongside making offsetting savings. “It is hugely important that we have targeted tax cuts that help to grow the economy.”

Hockey said both tax cut and higher surplus are important when asked which among the two is a priority.

Prior to his speech, Shadow Treasurer of Australia, Chris Bowen, flagged Hockey’s plans as “another thought bubble.”

“If the average Australian had a dollar for every time they were promised tax cuts from Joe Hockey, they'd be as rich as he is,” Shadow Assistant Treasurer Andrew Leigh told Sky News. The Greens on the other hand blamed Hockey for initiating a “tax cuts arms race.”

The Tony Abbott government however has an impressive record in coming down on spending thus ensuring low taxes. Meanwhile, Opposition leader Bill Shorten has expressed concerns over the inability of the government to explain how they are planning to pay off these tax cuts.

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