Australian Tax Commissioner Michael Carmody this week announced that he will advise employers to use the 2005 withholding tax rates announced in this year’s Federal Budget, despite attempts by the principal opposition Labor Party to delay the passing of the tax schedules in parliament.
“The majority of the Senate has indicated they will not disallow the schedules,” Mr Carmody said in a statement released on Tuesday.
“On that basis I am confident to advise employers to use the 2005 withholding rates from 1 July 2005," he added.
The Labor Party is trying to stall the parliamentary progress of the withholding tax schedules in protest at what it considers unfair tax cuts, announced by Treasurer Peter Costello in his April budget speech.
"How does the Treasurer defend a $65 a week tax cut to the new Telstra CEO with a yearly package of $11 million while a Telstra linesman on $55,000 a year gets just $6 a week?" asked Federal Opposition Leader Kim Beazley.
Under the budget measures, Australia's 17% income tax rate will be reduced to 15% from 1 July 2005. Additionally, the tax threshold for the 42% and 47% rates will also be raised on 1 July 2005 and again on 1 July 2006, meaning that taxpayers will not reach the highest marginal tax rate until they earn around 3 times average weekly earnings.
However, the Labor Party's actions are fast losing credibility after the Australian Democrat Party and the Green Party told Costello that they will not support any disallowance motion in relation to the new tax schedules, despite opposing the legislation itself.
According to Prime Minister John Howard, small business operators can now look forward and plan with a higher degree of certainty.
"Mr Beazley has been thoroughly sidelined, he's made himself irrelevant," Mr Howard stated.
"The reality always was ultimately the tax cuts would go through - it was a question of whether small business would be messed around," he added.
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