Income tax cuts 'a far cry' from full reform, says IPA

The Senate is expected to pass all three stages of the government’s income tax cuts today, with One Nation senator Pauline Hanson confirming her support.

In response, the Institute of Public Accountants chief executive Andrew Conway told Public Accountant that this is no longer a matter of the political battle where the parties argue over tax reform.

He said it is now up to the Senate to determine and legislate accordingly, and “get on with the job”.

“The incremental three-stage approach to personal income tax is a step in the right direction, although it’s still a far cry from the much-needed holistic tax reform that would make the necessary difference for productivity growth,” Mr Conway said.

“Australia needs to reduce company tax to encourage growth, productivity and prosperity. It is well known that our current tax system is holding Australia back.

“The Australian Parliament should be focused on long-term reform to make our tax system simpler, more equitable, more aspirational and more competitive to provide Australians and Australian small businesses with the certainty and confidence to grow.”

According to the government’s income tax cut plan, the first stage is set to provide tax relief of up to $530 to low and middle-income earners for the next four income years from 2018-19.

In stage two, the top threshold of the 32.5 per cent tax bracket will initially be increased from $87,000 to $90,000 from 1 July, progressively increasing to $120,000 from 1 July 2022, as part of government efforts to protect middle-income earners from bracket creep.

The third stage will have the government, from 1 July 2024, increase the top the top threshold from $120,000 to $200,000, removing the 37 per cent tax bracket completely.

The IPA has in the past called for the major political parties to bring about robust and holistic tax reform instead of proposing piecemeal measures.