Second Reading Speech
by the Treasurer the Hon John DawkinsI move that the Bill be now read a second time.
This Bill will amend the taxation laws in one simple but important respect.
It will implement the personal tax cuts, to apply for the 1994-95 and subsequent income years, as outlined by the Prime Minister in his "ONE NATION" statement of 26 February 1992. This is an indication of the Government's commitment to deliver on these tax reductions.
Mr Speaker, I will now outline this measure in more detail.
The reductions in the tax rates will have effect from 1 July 1994.
New scales of personal tax rates for incomes within the range $20,700 to $50,000 will operate from 1 July 1994. Further reductions in those rates will apply from 1 January 1996.
As the second reduction in personal tax rates has effect from 1 January 1996, the Bill also contains a composite rate scale for the 1995-96 income year. That scale is obtained from an average of the tax rates to apply from 1 July 1994 and 1 January 1996 respectively.
The reductions will result in the current 38% rate for the income range $20,700 to $36,000 being reduced to 30% over a 2 year period. The income range will also be widen. After 2 years, the new 30% rate will apply to the income range $20,700 to $40,000 being $4,000 wider than the current range.
The current 46% rate for the income range $36,000 to $50,000 will be reduced to 40% over the same period with a corresponding reduction of $4,000 in the income range to a range of $40,000 to $50,000.
The tax cuts will be reflected in lower pay-as-you-earn deductions from 1 July 1994.
The cost to the revenue of the personal tax cuts is estimated at $3,200 million, $5,200 million and $7,900 million for the three financial years commencing on 1 July 1994.
I present the Explanatory Memorandum which contains more detailed explanations of the provisions of the Bill.
I commend the Bill to the House.