Overview

This paper examines the impact of the changes in taxation provisions for 1989-90 announced by the government in April 1989. The assessment covers: individual components of the tax package; its overall impact; impact on low income families; impact of increased employment on family earnings. The paper also compares the impact of proposals put forward by the Australian Institute of Family Studies with income splitting. The conclusion is that, overall, the Government's tax package redresses substantially all of the deficiencies in the tax-transfer system affecting families and single individuals. More attention needs to be paid, however, to the area of family-related rebates. It is also concluded that proposals to introduce income splitting do not deliver any benefits to low and middle income families and provide unnecessary and wasteful assistance to high income families. Additionally, income splitting would create harmful and inappropriate rigidities within the labour market, severely affecting married women.

Australian Families Income Transfer (AFIT) Project Bulletin No 6, May 1989.