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Treasurer Scott Morrison describes income tax as Australia’s ‘silent tax’

TREASURER Scott Morrison has given the clearest signal yet that income tax could be cut to offset a potential rise in the GST, describing it as a “silent tax’’ that penalised working people.

Mr Morrison’s comments came as the Government continued to spell out its case for why the 10 per cent goods and services tax could potentially be increased.

The Treasurer said he did not know if “people have woken up to this yet’’ but the average Australian worker would be paying 37 cents in the dollar from next year due to bracket creep.

“In 2016-17, if you’re on the average wage you’ll be on the second-highest tax bracket,’’ he said.

“And it is an important thing to do to avoid those sort of outcomes in our tax system that penalise people who are getting out working, saving and investing.”

He said while GST was visible to Australians, income tax was rarely seen.

“Income tax has become the silent tax for many Australians, particularly young Australians,’’ he said.

“When they go to the ATM to draw out their cash, they do not see, as they do with the GST on their sales receipt, the 19c or 32.5c or 37c or 45c that has been deducted in income tax — let alone the extra 2c for the Medicare levy.’’

Mr Morrison told the Melbourne Institute/The Australian Outlook conference in Melbourne that Australia relied more on income tax revenue than any other OECD nation, except Denmark.

He said income tax bracket creep would be part of a broad, considered review of the tax system and warned: “We have no intention to rush to failure.”

The 2015-2016 Budget papers show the Government expects to reap $196 billion in income tax this financial year.

The most recent figures available from the Australian Taxation Office showed that in 2012-2013, Australia’s 12.7 million taxpayers paid $154 billion in income tax.

The majority of these taxpayers earned between $37,000 and $80,000 (4.7 million people) and $18,200 to $37,000 (3.1 million).

The Government is considering at least four options for raising and/or broadening the base of the GST, and taxation is looming as the key battleground in next year’s federal election, as the Government looks to kickstart the economy as the mining boom dries up.

Earlier, Prime Minister Malcolm Turnbull told the conference fairness was “absolutely critical” for tax reform.

“Any package of reforms which is not, and is not seen as, fair will not and cannot achieve the public support without which it simply will not succeed,’’ he said.

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