John Howard has signalled to low and middle-income families they can expect substantial tax relief in next month's Budget, after identifying the need to help with the costs of raising children as his Government's top priority. The Prime Minister also dampened expectations for significant change at the top end of the tax scale, saying the Government had already done a lot for high income earners, with the number of people paying the top marginal tax rate of 48.5 per cent falling from 14 per cent to 3 per cent in the past three years.
Mr Howard said yesterday rhetoric on tax reform meant little without a focus on the pressures facing families. "My Government places the low and middle-income families of Australia squarely in the foreground of our policy lens," he said. "And strengthening the family - helping them with the costs of raising children - is the best way any government can reinforce social cohesion and stability in a changing world."
After the $4 billion-a-year increase to the family tax benefit system in the 2004 pre-election Budget, the Government may choose to deliver help to families in a different way this year. In a speech to the Menzies Research Centre last night, Mr Howard said the family tax benefit system gave parents choices about how they balanced work and family responsibilities. "The Government has been especially keen to give families with children greater freedom to choose how they balance work and family responsibilities, including through additional support for those families who desire to have one parent - usually the mother - at home full time with children in their early years."
He ruled out introducing a family income means-test on the benefit paid to mothers who choose to stay at home, saying that Labor's proposal to cap payments where family income exceeded $250,000 was the "thin edge of the wedge". He said the benefits were not middle-class welfare. "They are tax relief for a universal reality - that it costs money to raise children." Mr Howard said nearly three quarters of recipients were on incomes below $50,000 a year.
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