Bracks' Tax Record Comes Under Fire

The Age

Tuesday August 16, 2005

PAUL AUSTIN STATE POLITICAL EDITOR

PREMIER Steve Bracks' call for income tax cuts and relief from bracket creep was the height of hypocrisy, according to the State Opposition.

Opposition treasury spokesman Robert Clark said Mr Bracks had no right to lecture the Federal Government on tax reform when his Government had imposed "one of the largest and most sustained tax increases in Victoria's history".

Mr Clark accused Mr Bracks and Treasurer John Brumby of following a "deliberate strategy of using bracket creep to impose massive increases in property taxes" since coming to office in 1999.

His attack follows Mr Bracks' call for a cut to the top rate of income tax to make Australia more attractive to highly skilled workers who are in demand worldwide.

In a 50-page blueprint for national economic reform, sent to Prime Minister John Howard and other state premiers, Mr Bracks wrote: "Many thoughtful people from all sides of Australian politics have argued that a simpler tax system with a broader base and lower rates could significantly enhance (workforce) participation, productivity and efficiency."

He told Jon Faine on ABC radio: "We need tax cuts across the board - at the top end, but right through the middle and lower ends as well."

Mr Bracks said bracket creep - where inflation pushes incomes up into the next tax bracket - was a disincentive to people re-entering the workforce or working harder.

At a time when Australia's economic prosperity was under threat, because of the ageing of the population and increased global competition, the nation would benefit enormously by "taking the bracket creep off and giving that back in the pockets of ordinary Australians".

But Mr Clark said Mr Bracks could not be taken seriously on tax reform "unless he is prepared to renounce and wind back the huge increase in state taxes that his own Government continues to impose".

"This year Victorian revenue will equal $30.6 billion, compared with just $20.9 billion in 1998-99 - an increase of more than 46 per cent," Mr Clark said.

He said the stamp duty scale had remained unchanged despite the fact that the price of a Melbourne house had risen by more than 80 per cent since the election of the Bracks Government. Land tax receipts were expected to be $824 million this financial year, compared with $378 million in 1998-99.

He said the Bracks Government had imposed new taxes including: a gaming machine levy (introduced in 2000 and increased in 2001 and 2005), payroll tax on apprentices and trainees (2003), a water tax (2004) and a city parking tax (2005).

A spokeswoman for Mr Bracks, Alison Crosweller, defended the Government's record on tax reform. "We have cut payroll tax from 5.75 per cent to 5.25 per cent, the second lowest rate in Australia," she said. "We have also increased the payroll tax threshold from $515,000 to $550,000, the first increase in more than a decade."

© 2005 The Age

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