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Rudd details tax policy

Sid Marris, Online political editor | October 19, 2007

KEVIN Rudd has announced major tax refunds for parents, offering up to 50 per cent rebates for school expenses.

Labor will overhaul the tax system, creating three rates of 15, 30 and 40 per cent by 2016 and will create an education fund by not paying the Coalition's tax cuts for the rich.

Labor will create a $2.3 billion education tax refund to help working families educating their children, the Opposition Leader said today.

The education fund will be delivered by not paying the tax cuts for those earning more than $180,000, outlined by John Howard and Peter Costello.

The announcement follows the Coalition's unveiling of $34 billion of tax cuts on Monday after announcing a $60 billion boost to the budget because of strong economic conditions.

The package keeps the Coalition's tax cuts for the lower paid, and moves around those targeting the higher paid into education and health as part of Labor's pitch that it is providing a "balance'' between services and tax.

The cost will be $31 billion initially. The cost of the "goal'' of three rates is not known and would come in after the next term. Opposition treasury spokesman Wayne Swan said Labor would take advice and ''will only do it if it is affordable''.

The remaining $3 billion from the Coalitions proposals will be diverted in future years in the education tax refund ($2.3 billion) and health ($600 million).

Eligible parents would get a 50 per cent refund for every year up to $750 of education expenses for each children attending primary school. 

Labor also would provide a 50 per cent refund every year for up to $1500 of education expenses for each child attending secondary school.

"Eligible items will include laptops, home computers, printers, home internet connection, education software, and school text books,'' Mr Rudd said.

"I am confident this is a good policy,'' Mr Rudd said. "We flipped and flopped over 11 years with no goal for tax reform."

Mr Swan said Labor was prepared to support the tax cuts for the lower paid because they fitted the long-established Labor demand that any reforms injected incentive for working families into the system.

Mr Rudd insisted he had not been rushed into the announcement and had been working on the plan for some time, but conceded the very large changes in Monday's budget statement required some re-working.

The Labor leader also said he did not believe the tax cuts would put pressure on interest rates because the money that would have been spent on tax cuts for the wealthy will be invested into a driver of productivity, education, Mr Rudd said.

"If mum and dad are spending money on buying a laptop, spending money on buying a home computer, spending money on... purchasing internet connection, education software, printers, and books, those expenditures, (they) will be eligible to claim the 50 per cent education tax refund that we are putting forward," Mr Rudd said.

"We need to equip our young people with the skills necessary to participate in the digital economy of the 21st century."

Mr Rudd defended the decision to delay tax cuts for those earning more than $180,000 and downplayed potential political damage.

He said that in politics, leaders had to make choices, and "I don't think people in that bracket need it right now''.

"I think most people in that bracket wouldn't mind putting some of that money into bridging the digital divide,'' Mr Rudd said.

The announcement follows the Coalition's unveiling of $34 billion of tax cuts on Monday, after announcing a $60 billion boost to the budget because of strong economic conditions.

Ahead of the leaders’ debate on Sunday night, Mr Rudd had been under pressure to prove his economic credentials with more detailed proposals than Labor has laid out, in the lead-up to the November 24 election.

Mr Rudd and Mr Swan have said they want to get the balance right between services and tax cuts.

They have declared they will not match all of the Prime Minister’s spending promises ''dollar for dollar’’.

Any tax and welfare system must boost participation, increase simplicity, focus on working families, provide an incentive for those who want to work more, and increase international competitiveness, Labor has said.


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