Australia’s tax system is once again in the spotlight with a new proposal aimed at easing financial pressure on certain couples. Designed to provide immediate relief, the idea offers a tempting promise of tax savings.
However, while it may sound appealing on the surface, it raises deeper questions about the fairness and efficiency of the country’s broader tax framework.
As Australians celebrated and debated the significance of Australia Day, a policy proposal from Pauline Hanson and One Nation quietly made its way into the public discourse, suggesting a new way to alleviate the tax burden on couples with children.
The idea was simple: allow couples to split their income for tax purposes, potentially saving them thousands of dollars.
The proposal put forward by One Nation would enable couples to divide their income evenly across two tax returns, thereby maximising the use of the tax-free threshold and lower tax brackets.
One Nation candidate Jennifer Game illustrated the potential savings with an example: ‘Income tax on a couple in which one person earns $120,000 and the other $30,000 is $31,709; under our proposal, they could split incomes evenly ($75,000 each) and save $2,022.’
However, these figures were reportedly based on outdated tax brackets, and the actual savings would be slightly higher at $2,100.
But is this policy truly beneficial? Critics, including Australia Institute chief economist Greg Jericho ‘don’t think it has merit at all.’
‘It’s been around for many years, the idea of income splitting… the main problem with it is it really just benefits high-income earners, and it also acts as a disincentive for mostly women to actually go into the workforce,’ he explained to 9 News.
His dismissal of the policy’s merit underscores a broader consensus among experts that piecemeal tax cuts may not be the solution Australia needs.
The call for tax reform is not new. It has been over 15 years since Dr Ken Henry, former Treasury secretary, delivered a comprehensive review of the tax system with 138 recommendations for modernising it.
Sadly, only a handful of these recommendations were implemented, and some were later repealed. The result, according to Henry, is an ‘intergenerational tragedy’ that has left Australia’s tax system outdated and inadequate.

Jericho thinks ‘the way to reform the tax system is… to ensure that those who can afford to pay do pay a fair amount of tax, and also to remove these concessions and distortions, most of which go to the richest 10 to 20 per cent.’
The Australia Institute points to areas like superannuation, capital gains, fuel tax credits, private trusts, and luxury car exemptions as starting points for reform. Additionally, they emphasise the need for corporations, particularly in the gas and mining sectors, to contribute more through taxes like the petroleum resources rent tax (PRRT), which is currently riddled with exemptions.
‘The petroleum resources rent tax (PRRT) is, to be honest, a joke,’ Jericho opined, adding, ‘There are so many exemptions to it, so many ways that their tax lawyers can ensure that even on some of the world’s largest liquefaction and transportation of natural gas (LNG) projects, they do not believe they’ll ever have to pay any PRRT.’
Despite the perception that the country is a high-tax nation, the reality is quite the opposite. With a tax-to-GDP ratio of 29.4 per cent, Australia lags behind many countries with high quality of living scores and even falls below The Organisation for Economic Cooperation and Development (OECD) average.
Jericho adds that raising taxes to the OECD average could generate an additional $135 billion annually, funds that could ‘help improve the economy, help reduce poverty, help improve services.’
The question remains: will meaningful tax reform occur? While there are few signs of imminent change, the recent reworking of stage 3 tax cuts offers a glimmer of hope. Jericho believes that with the right argument and political courage, reform is possible and could even be politically advantageous.
For instance, reducing tax concessions for the wealthiest could free up resources for initiatives like including dental care in Medicare—a move that could resonate with voters.
What is your take on this proposed policy? Share your thoughts with the YourLifeChoices community.
Also read: Act fast to save $1,000 on taxes: Here’s an urgent warning from ATO!
There are lots of areas where tax reform is needed, but Hanson’s proposal is one that I put forward in 1976 and I still firmly believe it should be implemented – though potentially with some sensible limits. Women who stay at home and care for their children are not valued in our society. If they go to work, the government pays for childcare. Why should families be punished for making the choice to have a parent at home or working part time or casual so that they can give the children better quality care?