EMBARGO: 7,00 p.m.

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For Press 21 August 1977

ELECTORATE TALK

The Government’s second Budget - delivered by the Treasurer last  week - is a Budget of real reform. It continues with the great  reforms we commenced last year. It recognises that people want  to be able to make decisions that affect their own lives, and

that they want freedom to choose.

At the same time, the Budget gives reality to our complete  commitment to help those most in need. Our tax reforms offer  renewed hope for millions of Australian men and women burdened  by the yoke of crippling taxation on their incomes.

Make no mistake, my Government's tax reforms are the greatest  single reform of our tax system ever introduced by any Government  in this country.  This reform with its new system of tax  calculation, rewards initiative,  provides incentive and taxes  fairly. This is precisely what a tax is supposed to do.

My Government has always maintained that the present personal tax  system hits too hard at the pay packets of all Australians. We have been one of the highest taxed nations in the world. We have admitted this fact ~ but we have also done something

about it.

Last year we introduced tax indexation, which stopped governments  taking an even larger share of incomes simply because of inflation.  We stopped this unlegislated tax grab by Canberra. That was the  first step. Now we have introduced a three-tiered standard rate

of taxation, that will start from February 1.

This system is one of the most advanced in the world. Principally,  it means that nearly 90 percent of taxpayers will pay only 32 cents  standard rate of tax. For a person on average earnings of about  $10,000 there is a built-in incentive to earn another $5,000 -  either in salary or overtime ~ without being forced into a higher  tax bracket. Three typical weekly salary rates demonstrate the  savings from tax indexation and our new reform. The taxpayer with dependent spouse, earning $140 a week will save  $4.87 a weekÃ¢ÂÂ  The same taxpayer earning $200 a. week will save  $6.67 a week, while the taxpayer earning $280 a week will save

$15,33 a week.

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Despite the tactics of the Labor Party to deliberately confuse  the community on the extent of this reform, the plain fact remains -  exTery Australian taxpayer will be better of.

The actual cost to my Gove rnmen t in lost revenue of our tax reforms  in this financial year will be more than $1300 million. That is  made up of full tax indexation, costing $965 million, and the new  reform from February 1, costing another $406 million.

This is not a sleight-of-hand or a fiddle, as Labor claims -  it is the real benefit to taxpayers. The cost of our tax reforms  in the following financial year (1978-79) will be $1800 million.

This is made up of $467 million which is the cost of half indexation,  and $1390 million which is the cost of the tax reform for that  financial year.-That is nearly a $1000 million additional benefit to  taxpayers over and above that which they would get from full  indexation of the old rates.

Clearly, Labor are not too delighted about my Government being  able to introduce remarkable tax reform within just two years of  being elected. That's exactly why they now seek to muddy the water.  They will fail, because from February 1 next year, every Australian  will receive the benefit of the new tax system, as well as tax .

indexation. ..Nothing Labor says will alter that.

We were only able to undertake tax reforms because we have .

kept Government expenditure restrained and under tight control  for two successive years. We have shown Australians that  governments have to make real choices between expenditure on their  own accounts, and providing tax relief for individuals.

The Government's great tax reforms have maintained our commitment  to help people in need. Benefits to individuals have been fully  protected. Not a single cent has been cut from any benefit  paid to any individual under our social welfare programmes. Indeed, many payments have been substantially increased.

The Budget is a budget of genuine reform. The Government has  introduced historic tax reform, maintained our commitment to  those in need, and at the same time has framed a Budget that will  continue the relentless task of bearing down on inflation.

