Treasurer Joe Hockey has warned that average wage earners could soon be paying the second highest tax threshold of 37 cents in the dollar.
It is a clear signal that he is worried about tax bracket creep, where people find themselves paying higher tax just through wage inflation.
It could mean changes to tax thresholds and rates as a result of the Abbott government tax review white paper.
New figures show the average wage in Australia increased by 2.8 per cent in the past 12 months to $76,800 a year.
Mr Hockey said higher wages bring greater prosperity but he also pointed out that the second highest tax threshold kicks in at $80,000.
"So obviously within a couple of years it's entirely possible that someone working in Australia earning average wages would be in the second highest tax threshold," he told parliament.
That would start to detract from economic growth.
"The more we tax individuals, the slower the economy ends up being and we want to give Australians more money and more jobs," he said.
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