Wayne Swan says the tax system needs simplifying.
Last Update: Monday, October 9, 2006. 9:00am (AEST)

Labor plans to simplify tax system

The Federal Opposition says Australia's tax laws must be overhauled to provide greater incentives for middle to lower income earners.

Labor's treasury spokesman Wayne Swan says those on middle to lower incomes have missed out on the benefits of tax reform and face some of the highest marginal rates in the country when they work additional hours.

Mr Swan says Labor is developing a long-term strategy to simplify the tax system and ensure people in that bracket do not lose out.

"It's very important that we put incentive in the tax system, particularly for those middle income Australians who work hard to make the economy strong," he said.

"They've not been the focus of the Government's tax cuts in recent times, but when they work hard they deserve some incentive."

Mr Swan says any plan to make changes to the tax rates will not be finalised until after next year's Budget.

"What we want is a long-term plan that's affordable over time, and we may not be able to do all this in one hit," he said.

"But what we do need, in addition to dealing with the skills and education of our people and dealing with national leadership on infrastructure, is to put incentive in the system so that people who want to improve their skills get some reward for their effort."

But Liberal backbencher Andrew Southcott has defended the Government's tax policy, saying it has delivered tax cuts in five budgets since 2000.

"We've cut a lot of tax, we've cut the top income tax rate," he said.

"We've got most people on the tax rate of 30 cents in the dollar. This Government has been the biggest tax-cutting Government in Australia's history."