by Alan Thornhill
Australia’s tax system has had a major overhaul, for the new financial year which starts on Sunday.
That has included the insertion of a radically new trickle down device, to spread some of Australia’s vast mineral wealth, to the broader community.
That, of course, rests on the new Minerals Resource Rent Tax, which is still to be tested in the High Court.
But Wayne Swan, who designed the minerals tax is confident that it will be robust enough, to survive that challenge, launched by the West Australian mining magnate, “Twiggy” Forrest.
The minerals tax – and the still controversial new carbon tax – both come into effect on Sunday, July 1.
Those two changes, alone, would add up to the biggest reform the nation’s tax system has seen, since John Howard’s “never, ever” Goods and Services Tax was introduced, on July 1, 2000.
But there is much more to the present overhaul, than that.
There will, for example, be tax cuts, for everyone earning up to $80,000 a year, increased pensions and benefits, and completely new payments, like the Schoolkids Bonus.
Those on higher incomes, though, will mostly miss out, on the promised benefits.
These changes might well stimulate the economy.
That’s because this overhaul will put more cash into the pockets and purses of the relatively less well off Australians.
There is not much that economists agree upon, these days.
But they do admit that low to middle income people have “a greater propensity to spend” than the rich.
So much of that extra money, from those tax cuts and higher benefits, might soon be setting the nation’s cash registers ringing again, after their long, oppressive silence, since onset of the global financial crisis, back in 2008 .
Mr Swan did not mean the budget he introduced back in May to be stimulatory.
The Treasurer, himself, was quite specific about that.
And he backed his words, at the time, by promising to produce a surplus, in the new financial year.
But the stimulatory angel is buried in the detail, of Mr Swan’s tax changes, anyway.
His decision to treble the tax free threshold, alone, would see to that.
The new threshold will be $18,200.
So every worker, earning up to $80,000 a year will pay less tax.
Pensioners – and others on benefits – have already had extra payments, to help them meet the higher electricity bills – and other extra expenses – that will come with the new carbon tax.
There will also be a new Schoolkids Bonus, paid each January and July, from 2013.
In short, these are clever changes, just right for the present, still difficult times.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Wednesday December 11
The Dow Jones index fell 53 points to 15,973
Acting PM Warren Truss writes to Mike Devereux seeking “a clear statement” on Holden’s future
The Federal Treasurer, Joe Hockey, says the Mid-Year Economic and Fiscal Outlook will be released next Tuesday, at the National Press Club.
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