New inter-agency team targets ‘welfare traps’ for tax white paper

By Stephen Easton

Friday October 16, 2015

A new inter-agency team led jointly by Treasury and Social Services staff is looking at how income tax could be tweaked to get more people off welfare.

Treasurer Scott Morrison has put bureaucrats from his previous portfolio and Treasury staff at the helm of an inter-departmental working group to look at the link between income tax and welfare payments, with a view to informing the tax white paper that accompanies the federation reform process.

It appears the Treasurer believes a large number of welfare recipients would like to pick up tools and become lifters, not leaners, in his predecessor’s terminology, but are discouraged from doing so by the interaction between the “complicated welfare system” and income tax arrangements.

Led by Treasury and the Department of Social Services, the new inter-departmental working group is to advise government on how that interaction could be improved and suggest policy solutions that will create more jobs and higher wages.

As unemployed or under-employed people move into work, Morrison says it is important they are not “penalised with excessively high tax rates”.

The Treasurer says the group will “analyse impediments within our tax and transfer systems that act as disincentives for Australians who want to work, save and invest” and inject “a detailed consideration of these issues” into the forthcoming white paper.

“Greater cooperation between Treasury and DSS will promote greater efficiency and flexibility in our system to support a more innovative and agile economy.”

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