Index income tax brackets

Each year inflation pushes up prices and wages around the country. For many people, their wage increase is barely enough to cover the price increases, leaving them no better off than they were before. And yet their nominal wage increase pushes them into higher tax brackets, meaning that they have to pay extra tax, even though they are not really getting any richer. This insidious part of our tax system is called “bracket creep” and it means that there is effectively a hidden tax increase every year without any new law or public debate.

There is a simple solution to this problem. If the tax brackets were indexed to changes in price or average wages, then the hidden tax increase would be removed. Politicians would still be free to campaign on a policy of increasing taxes if they wanted, but they would have to do it honestly and transparently… instead of relying on a hidden tax increase every year.

Income taxes are already too high

Australian income taxes are already too high, creating a disincentive against productivity, investment, and innovation. This is one of the reasons that Australia has been in a per-capita recession for most of the last three years, with the average Australian poorer now than they were in 2022. If we want to kick-start our economy again, then we need lower income taxes… and yet we have a system that creates automatic tax increases each year. This cannot be justified and should not be maintained. The Australian Taxpayers’ Alliance calls on all politicians and political parties to commit to indexing income tax brackets and removing the insidious bracket creep.

If you feel strongly about this issue, please feel free to share your thoughts with us below, and consider becoming an ATA member.