Gender equity in the tax-transfer system for fiscal sustainability

Vol: 
5/2016
Author name: 
Apps P
Year: 
2016
Month: 
August
Abstract: 

In the 1980s the Australian Personal Income Tax was highly progressive and family payments were universal. The system ranked well in terms of gender equity and female labour supply incentives. During the Howard years the progressivity of the rate scale declined dramatically despite rising inequality in wages, income and wealth, and the individual as the unit of taxation for families was replaced by a system of “quasi-joint” taxation. As a result many partnered mothers as second earners now face effective marginal tax rates that are well above the top rate on personal income. At the same time, many face high child care costs in a largely privatised system. In addition, women, typically on lower pay, cannot gain equally from tax advantaged superannuation. This paper presents an analysis that highlights the counterproductive effects of the gender discrimination in these policies on female labour supply, household saving and the tax base, and argues for policies that promote gender equity for fiscal sustainability in an economy undergoing the far-reaching effects of demographic change.

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