Bracket creep could be eliminated,
giving the average worker an extra $14 a week, according to economic analysts
Econtech, The Daily Telegraph reports today.

“Bracket creep, where workers earning close to income thresholds
are pushed into a higher tax bracket, could be eliminated by linking tax
brackets to wage growth,” the Telegraph report says. “The brackets would rise
each year as earning capacity rose, allowing the Government to reduce the main
two tax rates, 30c and 42c, by 2c. The top rate, of 47c, would remain the same
as would the very lowest of 15c.

“The proposal would cost the Government $26 billion over three
years and could start as early next financial year.

“It would save the average taxpayer $14 each week from next year
and increase to $22 within three years. The indexation would deliver cuts
across the board from $5 to $13 over three years for low income earners to $55
to $88 for those in the top bracket.”

As the report observes, Britain and Canada link tax rates to
inflation.

Then there’s Louise Dodson‘s opinion piece in
the SMH, ‘WorkChoices just part of the revolution.’

It says “One Liberal MP told the Herald that employees would be encouraged
to become independent contractors and operate as small businesses. ‘This will
have two consequences. Firstly, it will further reduce trade union membership
and secondly, it will reduce tax revenue because more people will be paying the
company tax rate of 30 per cent rather than personal income tax rates of up to
47 per cent. It could increase pressure to drop the top personal tax rate to
align it with the company tax rate,’ he said.”

Really? This Liberal MP doesn’t seem to understand that these
people are not independent contractors in any real sense, but still employees.
The only difference is that they’ve created artificial corporate structures to
avoid paying the 18.5% difference between the personal rate and the corporate
rate.

These artificial corporate structures, of course, employ an army of accountants across
Australia, generate vast amounts of paperwork and record keeping – BAS , IAS,
PAYG etc – and result in billions of dollars of GST “churn” as these “independent
contractors” invoice their parent company, only for the parent company to claim
back the GST component later. Does this sound like an efficient tax system?

If the Libs are so keen for us all to become independent
contractors and pay the 30% rate, what the hell is the Alienation of Personal
Services Income legislation all about? Isn’t the express
purpose of this legislation to prevent employees becoming independent
contractors?

Naturally, none of this legislation would be necessary if the
corporate and personal rates tax rates were aligned.