Lets see how hard it would be to halve personal income tax rates across the board (ie the top rate would become just 22.5%).
The Australian Federal Government is projected to haul in around $290 billion in tax revenue next year. Personal Income Tax contributes around $123 billion or 42% of the total. Typically revenue would be expected to grow in line with general economic growth. Assuming the economy manages to grow at an average of 3%p.a. over the next decade then if all else remained the same revenue from personal income tax would be at $165 billion in 2020. To cut income tax rates in half by 2020 we would need to cut income tax revenue down to just $82.5 billion. How hard is that?
Lets try this scenario. Lets assume that each year we take half of the 3.0% of total tax revenue growth and allocate it to new government spending. And we take the other 1.5% and allocate it to reducing personal income tax rates. Where are we in 2020? The table below shows that we comfortably hit our objective of cutting personal income tax rates in half.