I am deeply disappointed with the Coalition’s Budget, which further reinforces the trend to inequality in Australia. The proposed changes for income tax are the most profound changes to Australia’s tax system in years.
The Government is promoting a “Low and Middle Income Tax Offset”. Under this proposed budget, people earning $50,000 – $65,000 taxable income a year will see their tax bill reduced by $530 a year ($10 a week) in 2018-19. Because the offset is based on taxable rather than gross income, with the right accountant, someone earning $80,000 gross who finds $20,000 worth of deductions is also eligible for the $530 offset.
An interesting detail buried in the budget is that people with a taxable income below $37,000 will only receive a maximum offset of $200. Those most in need receive the lowest rebates.
Don’t be distracted from the key proposed change to the budget – the flattening of our progressive tax system. In essence, from 2024, a flat tax rate of 32.5% will apply to everyone earning between $41,000 to $200,000. This means those on higher incomes will snag a nice $7,200 tax cut on $200k income from 2024.
This flattening of the tax system will deepen inequality. Those on lower incomes will ultimately pay more tax. Tax cuts will mean government has less revenue to spend on tackling issues that really matter to social and economic equality: housing and homelessness, education and health. $26.2 billion over four years could support a lot of schools, hospitals and an affordable housing scheme.
This is no time for complacency. We need to insist on stronger policies that address housing, health and education and a proper progressive tax system that gives us a chance at being a fairer society.
Wendy Brooks, Managing Director, Wendy Brooks & Partners