vggwiJj. AUSTRALIA,

PRIME MINISTER

10 July 1977

ELECTORATE TALK

This week, millions of Australians have received more cash in  their pay packets - simply because of the Government's personal  income tax indexation policies. The amounts of extra "take-hone"  pay are significant.

For example, a taxpayer with a dependent spouse earning a weekly  wage of $200 - which is about the level of average weekly  earnings - will have his weekly take-home pay boosted by  $3.45. This represents an annual benefit of $187.50.

A taxpayer with a dependent spouse, earning $12,000 a year will be  $257.50 better off;  a taxpayer earning $13,000 a year will be  $310.70 better off.

The Government tax indexation policy not only affects the income  tax scale, but also tax rebates.  For instance, the general  concessional rebate of $540 that applied in 1975/76 moved to  $610 last financial year and will increase to $676 this current  financial year.

Tax indexation does one simple thing - it guarantees protection  to the community from unlegislated tax increases brought about  by inflation. In times of inflation Australian taxpayers  with increasing incomes have found themselves pushed into high

tax brackets under the progressiye income tax scale. As a result, they were really no better off than they were before  the wage increase - and in some cases they were, in fact, worse off.

Last year, within a few months of the election, we stopped this  tax drain. In May last year, the law was amended to make sure  that indexation adjustments would occur automatically each year. This law. guarantees taxpayers that adjustments would be made to stop  inflation pushing them into higher tax brackets.  There was an  indexation adjustment on July 1 last year, another one a few days  ago, and the next will occur in July 1978, and so on. _

So taxpayers are continuing the reap the gains from tax indexation.

2.

I think it is worth making the point that the Liberal/NCP government  introduced tax indexation in a time of severe economic restraints. .In revenue terms, the cost to the government has been considerable.

As a result of tax indexation from July 1 last year to June 30  next year, the government will take about $2,000 million less from  taxpayers than would otherwise have been the case. In Australia now, for the first time, we have moved away from

the days when inflation and high taxation increases went hand in  hand. We have broken that link that was so destructive.

Tax indexation - along with other reforms such as the Family  Allowance programme - is providing more than just extra money  resources to Australians. It is, in no small way, helping to  reassert independence for many thousands, and in turn to enhance,

personal dignity and self-respect.

It is that kind of achievement that this Government continually seeks

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