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Income Tax Changes: A Boost to Households and Business

In welcoming the personal income tax cuts passed by the Senate today, Innes Willox, Chief Executive of the Australian Industry Group, said: "The staged program of changes to personal income tax enacted today will put more income in the hands of Australian households and will improve the rewards from working, saving and investing for most taxpayers. It will boost the economy both by lifting household spending and by sharpening the incentives to engage in productive activities.

"Today's measures, together with the proposed phase-down of the company tax rate to 25 per cent over a number of years, are affordable and should provide a solid pillar around which more comprehensive improvements to Australia's tax arrangements can be fashioned.

"The initial-year benefits will be concentrated on lower and middle-income earners on pre-tax incomes of up to $90,000 a year. Importantly, people earning between $37,000 and $90,000 a year will keep more of any extra income they earn. These changes will combine with recent strong increases in job numbers and rises in wages to deliver a substantial boost to household disposable incomes and consumer spending. We expect further increases in business activity and employment to flow from these gains.

"While several years down the track, the second and third-stage reforms will extend benefits to a broader range of households. The subsequent changes will further boost disposable incomes for many families and, critically, will lift the upper threshold of the 32.5% tax bracket and remove the current 37% bracket so that by 1 July 2024 people earning less than $200,000 will be taxed at no more than 32.5% with the 47.5% rate applying for income above this amount. This important reform will be a significant boost to incentives to work, save and invest and will help lift the productive capacity of the Australian economy," Mr Willox said.  

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