Low-income workers will receive nothing from stage 3 tax cuts: Australia Institute

By Jon Bragg

March 23 2022
Share

Bank CEOs and federal politicians are expected to be among the biggest beneficiaries in the next stage of tax cuts.

High-income earners including major bank CEOs, federal politicians and surgeons are set to receive a tax cut of $9,075 per year under the federal government’s stage 3 tax cuts.

Meanwhile, low-income earners such as aged care workers, disability carers and those on the minimum wage will not benefit at all, according to analysis from the Australia Institute.

All workers earning between $45,000 and $200,000 will pay a 30 per cent marginal tax rate when the changes come into effect in 2024, and the 37 per cent bracket that currently applies to workers earning more than $120,000 will be removed.

As a result, workers earning more than $200,000 will receive the full benefits of the tax cuts.

“Our research reveals that under this plan it’s billionaires that benefit while battlers get slugged,” said Australia Institute chief economist Dr Richard Dennis.

“How is it reasonable that a bank CEO earning $5.2m a year will be given a $9,000 tax cut, while someone working in aged care or on the minimum wage receives nothing?”

Based on average salaries, the tax cuts will also deliver savings to financial dealers ($4,661), financial managers ($4,558), human resource managers ($3,808) and barristers ($3,330).

The Australia Institute also identified which occupations would be most impacted by the end of the $1,080 low and middle income tax offset (LMITO).

While the government has not yet confirmed whether or not it will extend the offset into the next financial year, 90 per cent of taxpayers are expected to pay more if it does get removed.

Workers that would face higher tax bills include secretaries ($832), cooks ($533), delivery drivers ($494) and aged and disability carers ($410).

Factoring in both the introduction of stage 3 tax cuts and the removal of the LMITO, the Australia Institute said that the average bank worker would pay $878 more tax during the 2024-25 financial year than they currently pay.

Teachers would also be among the losers, including those working in early childhood ($656), primary schools ($486), TAFE ($279) and secondary schools ($93), as well as registered nurses ($399).

“By cutting taxes for the higher-come earners, this extreme plan will make our tax system permanently less fair. It’s an attack on Australia’s fair-go, progressive tax system,” commented Dr Dennis.

“The stage 3 tax cuts also mainly go to men. Men get 67 per cent of the tax cuts while women get 33 per cent. This means that for every dollar of tax cut going to women, men get $2.”

Dr Dennis argued that the changes would lead to an increase in economic inequality in Australia.

“Low and middle income earners are more likely to spend their tax cut back into the economy, creating jobs and growth, while the highest income earners are more likely to stash the additional cash away,” he concluded.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Twice the demand: the case study behind Melbourne’s first‑home buyer surge

Resources

There is $17.5 billion in lost and unclaimed super across ...

ROOT