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Australia plans to replace family welfare payments with tax breaks

Xinhua, September 25, 2016 Adjust font size:

Australia's social services minister has flagged a plan to replace family welfare payments with tax breaks.

Christian Porter said the current family tax benefit (FTB) scheme, whereby families that earn less than 70,000 U.S. dollars total per year are awarded up to 5,200 U.S. dollars annually for every dependent child, was "deeply inefficient."

Porter said there were "hundreds of thousands" of cases every year where families were paying 9,000 U.S. dollars in income tax and then being awarded the same amount back in FTB payments.

"You can imagine that that is an extremely inefficient and costly system to, in effect, draw money from one group through tax to give it straight back to them, with all of the administrative costs and loss that occurs in moving that money through government back to the pockets of people from whom you took it in the first place," Porter told Sky News on Sunday.

"The FTB System, when it was designed in its present form by (former PM) John Howard and (former Treasurer) Peter Costello, had always envisaged tax credits rather than direct transfer welfare payments, but for a variety of reasons that didn't occur at the time.

"Allowing people to keep more of their own money, rather than taking money off them, washing it through government with all of the expense and administrative burden that takes and then giving it back to them, the first situation of letting them keep more of their own money is far preferable."

Porter said technological limitations at the time the FTB was first introduced was the reason it had defaulted to the current structure, but technological improvements within the Australian Taxation Office (ATO) could see the new system introduced by 2020.

"We will have certain junctures in the future that are available to try to sort through some of these very long standing, very inefficient problems and do it in a way that actually advantages recipients of welfare payments rather than disadvantages them," he said. Endit