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May, 2018 5:24 AM



Rich will still pay more tax: Turnbull

Rich will still pay more tax: Turnbull

Prime Minister Malcolm Turnbull has defended the government's seven-year plan to flatten the income tax system amid criticism it favours high earners.

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By AAP 10.05.2018 07:36 AM

Malcolm Turnbull insists high-income earners will continue to pay the bulk of income tax under his government's plan to restructure the system.

An analysis of the plan - which reduces the number of income tax brackets from five to four - shows the top 10 per cent of earners getting 40 per cent of the value of its tax cuts, while the bottom 30 per cent of earners will get just 7 per cent.

"We have a very progressive tax system and people on higher incomes pay more tax than people on lower incomes, in fact a lot more tax," the prime minister told ABC radio on Thursday.

"The personal income tax total collections are paid by the few, not the many and that will remain the same."

The Australian Institute says 80 per cent of income earners will face a flat tax by the end of 2025 with everyone who earns between $41,000 and $200,000 paying a marginal tax rate of 32.5 cents.

Its analysis found the top 20 per cent will get 62 per cent of the benefit of the proposed income tax cuts, while the top 10 per cent will get about 40 per cent.

It found the bottom 30 per cent will get seven per cent of the cut, while the bottom 10 per cent will get just 1.5 per cent of the tax cut.

But Mr Turnbull said the government's "huge reform" meant someone earning $200,000 would still pay 12.5 times more income tax than someone on $41,000.

"What we're saying is that hardworking Australian families, particularly middle-income Australian families deserve to keep more of the money they earn - it is their money," he said.

The bulk of Australians - 94 per cent - would not get "slugged" by going into a higher tax bracket if they won a promotion or worked overtime.

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