Low to middle income earners to get 'little benefit' from Coalition tax cuts
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Low-to middle-income earners would get little benefit from bringing forward the Coalition’s tax cuts, according to new modelling released on Monday.
With the federal budget to be handed down Tuesday night just weeks ahead of a May election, the government isn’t ruling out bringing forward stages two and three of its income tax package announced last year.
An analysis by the Australian Council of Social Service shows high income earners stand to gain $104 a week from the changes, while low-to middle-income income earners would get between 50 cents and $4 a week.
Key planks of the government’s tax package announced last year, including flattening the tax brackets so that people earning between $40,000 and $200,000 would pay the same rate of tax, aren’t due to come into affect until 2024.
Asked whether the government was planning to implement the changes earlier, Finance Minister Mathias Cormann wasn’t giving anything away on Monday.
“One more sleep and you’ll be able to see what’s in the budget tomorrow night,” Senator Cormann told reporters.
The first stage of the Coalition’s tax cuts will flow to about 4.4 million workers earning between $48,000 and $90,000 who will receive a $530 cash rebate in their tax return for the 2018-19 financial year.
But ACOSS modelling found the later stages of the reforms mean households with an income of $25,000-$37,000 a year would receive an average of 50 cents a week.
That rises slightly to $4 a week for households earning between $50,000 and $75,000 while those on more than $200,000 get the biggest benefit of $104 a week.
ACOSS CEO Cassandra Goldie urged parliament to block any attempt to implement more tax cuts days before an election is called.
“It’s grossly unfair to be handing those households on more than $200,000 a year an extra $100 a week, while we have three million Australians living below the poverty line,” Ms Goldie said.
ACOSS is instead calling for a $75-a-week increase to the Newstart Allowance for single people, which it says has not risen in real terms for 25 years.
“Instead of handing out more tax cuts to those who can do without them, the government should be supporting those on the lowest incomes by increasing Newstart and investing in our essential services, such as health, education and aged care.”
Labor has promised to reconfigure the tax changes to reduce benefits for those earning more than $125,000 a year to deliver more generous relief for low and middle income earners.
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