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THE PM'S EMBARRASSING SLIP ON TAX
23-April-2010
Isn't it just a little embarrassing for the Prime Minister, Kevin Rudd, to get the tax-free threshold wrong on national television?
On the Seven Network's Sunrise program this morning, a caller asked the Prime Minister about incentives for work, and in a generalised answer Mr Rudd was dead wrong on the correct level of the tax-free threshold.
Instead of informing the caller that the current tax-free threshold was $6000, the prime minister said: "...What we have is what we call a tax-free threshold.I think, from memory, it's about $12,000 to $15,000..."
On one hand you can see this as just a minor slip, but a Prime Minister who's promised a root and branch review of the taxation system shouldn't get a detail like that wrong. Mr Rudd's slip reflects a lack of attention to basic detail. Indeed, the long-awaited release of the Henry Review of taxation is supposedly imminent. The government has had the Henry review under lock and key for months yet in the public domain Mr Rudd slips up on one of the major incentives for workers that is built into the system.
If Kevin Rudd can slip up on a basic detail like the tax-free threshold how can we have confidence he will able to offer genuine reform of the overall taxation system that gets the balance right for pay-as-you-earn taxpayers and business alike?
Tax is not a subject Prime Ministers should get wrong.
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Excerpt of Sunrise Interview.
April 23, 2010
CALLER: My question is where's the incentive for people that choose to work harder and have a second job, as they're penalised more tax? Why isn't it charged at the same as the first rate job or at a lower rate?
PM: Well, first of all, Jason, if you're working a couple of jobs and out there contributing to the economy, you're doing absolutely the right thing and particularly over in the West we're having an emerging skills shortage. I just say people out there, working hard - the economy depends on you.
On the question of the tax system, though, let's just go to how it's structured. What we have is what we call a tax-free threshold. I think, from memory, it's about $12,000 or $15,000. That means for that first $12,000 or $15,000 that you earn you're not taxed, but that applies to all of your income, whether it's from, not just, it depends on all of your income, irrespective of whether you're working, say, two or even three jobs. So here's the reason that the Tax Office, I think, would be making the decisions they do about what tax rate to charge you up front - if they didn't do that upfront, what you'd be hit with come the end of the financial year is a huge tax bill, and I think that would be wrong and that would be an even worse incentive for going out there to work. They try to do that calculation upfront, and it's all based on you getting that, as it were, $12,000 or $15,000 tax-free amount for all your income wherever you earn it.
ends