The Coalition Government will establish an inter-departmental working group to analyse impediments within our tax and transfer systems that act as disincentives for Australians who want to work, save and invest.
The way our personal income tax system and complicated welfare system interact should not result in the creation of welfare traps, eroding or even removing the financial incentive to join the workforce.
The inter-departmental working group will be led by Treasury and the Department of Social Services (DSS). It will provide advice to government on the interaction between Australia's tax and welfare systems and suggest policy solutions that will encourage economic growth to deliver more jobs, higher wages and greater opportunities.
Our tax and welfare systems must cooperate to ensure Australians are better off working than being on welfare. The Government is determined to ensure the efforts of working Australians are rewarded as they work more and receive fewer welfare benefits, and that they are not penalised with excessively high tax rates.
We need a tax and transfer system that supports those most in need while rewarding working Australians trying to secure their financial security by building personal wealth.
The Government’s Tax White Paper process will include a more detailed consideration of these issues, informed by the working group, and in particular the impact of effective marginal tax rates and how the interaction between tax rates and welfare payments can better encourage Australians to work save and invest.
Greater cooperation between Treasury and DSS will promote greater efficiency and flexibility in our system to support a more innovative and agile economy.
The Coalition Government wants a tax system that will support growth in the economy and improve Australian living standards. A stronger economy generates more jobs and higher incomes, promoting prosperity and financial security.