Source: Australian Tax Forum Journal Article
Published Date: 1 Apr 2005
Bracket creep arises not just from the effects of inflation on the personal income tax schedule but also on the value of tax offsets. It also has implications for the real value of welfare payments and associated means tests. What results is a transfer of resources from individuals to the government. The size, nature and legitimacy of this transfer has been the subject of considerable debate.
This paper outlines the nature of the problem of bracket creep in the Australian tax and welfare system, its impact on taxpayers over recent years and proffers policy solutions designed to enhance transparency of government tax and welfare policies.
It argues that transparency in government policies is a critical element of good governance. If the government wants something other than full indexation of its tax and welfare system, it should be explicit about this intention rather then benefit from benign neglect.
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