Australia Should Adopt Family-Friendly Tax System

Australia should change its tax system to become more family-friendly, Matthew Canavan said in a speech to the Senate today. 

Single-income families could potentially save thousands of dollars a year under such a scheme. Senator Canavan gave the example where a single-income family earning $120,000 paid $10,000 a year more in tax than a double-income family also earning a total of $120,000 a year. 

"This is unfair. People with similar ways and means should pay similar amounts of tax," he said. “Each family, regardless of the way in which its income is earned, has the same costs, the same bills to pay, the same mouths to feed and the same spending obligations to meet. 

He said Australia had one of the most hostile tax systems in the world for single income families. 

“A study of the 37 OECD countries based on 2010 figures showed Australia was the fifth most discriminatory against single-income families. Since then, lifting the tax-free threshold from $6,000 to $18,000 meant single-income families had suffered an even greater disadvantage. 

“Our tax system subsidises both parents to go to work. That's the exactly wrong way around. We should be encouraging more people to stay at home with their children particularly when they are young. 

"I firmly believe that we must move our tax system to one based on the family, not the individual. 

"One option is that proposed by the Government of Canada, which pledged that, once their budget has returned to surplus, it will allow couples with a dependent child (under the age of 18) to split up to $50,000 of their incomes each year for tax purposes. 

"This or other initiatives that involve joint or family-based taxation would help bring about a greater level of neutrality in our tax system so that it does not discriminate against, or in favour of, families that choose to organise their work and lives in different ways."

A full copy of the speech is available here.

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