Taxing the poor, for years

The media’s full of the Howard government’s magic $3.7 billion “extra surplus” today. It’s hard to know how to start making sense of it all. But here’s one thought which struck me: the tax-free threshold for personal income tax.

Democrat Senator Andrew Murray says in Crikey today that the amount you can earn before being taxed has stayed at the same figure of $6000 since the year 2000.

If it had been indexed since 2000, it would now be well over $7000. Had the 1980 personal threshold of $4,041 kept pace with earnings, the tax-free threshold would now be well over $15,000.

Senator Murray also points out that the minimum income required for basic subsistence is around $13,000. That is, if you earn less than that, you simply don’t have enough money to cover the basic living expenses of accommodation, food, clothing, education, medical care, transport and so on. Sure, you might be able to fake it for a while, but eventually something will give.

3 Replies to “Taxing the poor, for years”

  1. @Zern Thanks for the compliment — at least I think it’s a compliment — but the credit on this one goes to Crikey and Senator Murray.

  2. The tax-free amount is actually about 10k with the low income rebate.

    Howevr I do agree with your premise – it is ridiculous that the tax-free threshold is not indexed by CPI or AWOTE. Things like pensions and various superannuation contribution limits are – so why not the tax-free threshold and even tax brackets? It’s something that should be strongly considered when the next bout of serious tax reform comes around.

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