Stage 3 tax cuts v bracket creep: Time to index the personal income tax rate scale

Author: Paul Tilley

In aggregate, the previously legislated 3 stages of personal income tax cuts announced in the 2018 Budget roughly match indexation of the tax scale over the 7 years, but with some redistribution of the tax burden from higher income taxpayers to lower income taxpayers. See my 2023 paper here. The newly legislated “stage 3a” tax cuts in aggregate still roughly match indexation, but with a distribution of tax cuts that more closely matches the bracket creep effects over the 7 years.

With personal income tax having been around half of total Commonwealth tax revenue for half a century and the structure of the tax rate scale having been intensely debated over recent year, now is the time to lock that in by indexing the rate scale to permanently remove bracket creep effects.

Download the paper

Comments are closed.