For most workers, the promised gains will prove illusory. Importantly, when the effect of bracket creep on the equity of the proposed GST package is taken into account, the conclusion that 'all groups are better off' is no longer sustainable. Some might argue that 'the past is past', and that bracket creep should be ignored. To do so is to generate a manifestly unfair result. By 1 July 2000 when the proposed package comes into effect, more than six and a half years will have elapsed with nominal wage rises but no income tax cut.
Wage earners deserve an income tax cut now.
The effect of bracket creep over six years of wage rises is to raise average income tax rates. This effect is particularly sharp for low paid workers who rely on modest Safety Net wage increases, but the proposed GST income tax cuts are least for the same group and insufficient to offset bracket creep for many of them. In the charts based on the Access analysis reported by the SMH, the 'missing column' is one which shows what the current tax liability would be if the income tax thresholds were first adjusted for bracket creep. The resultant picture of winners and losers under the proposed GST package differs dramatically from the Access results reported by the Age. A similarly changed pattern emerges for families with children, with gains much reduced at all income levels.