Federal government to consider tax overhaul

The federal government is to arrange a special tax summit to consider numerous Henry review options that have so far not been ruled out.

Due to be held in the middle of next year, the summit will aim to prompt a debate on tax reform in the Australian Parliament, the Sydney Morning Herald reported.

The decision to hold the summit follows criticism that the federal government only took up a narrow selection of the Henry tax review proposals when they were published in May.

According to the newspaper, one of the more radical suggestions that may now be considered is to bring in a two-tier personal income tax system that would create a $25,000 threshold under which no tax would be paid.

Above that, a flat rate of 35 per cent would be paid while employees earning more than $180,000 a year would pay a 45 per cent rate.

Reforms to the tax system, if carried through, could also affect the decisions of Aussies looking to compare savings accounts in search of the best returns.

Among its other recommendations, the Henry review suggested collapsing family tax benefits A and B into a single payment that would increase as children get older.

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