Archive for July, 2019

Oz Liberal party hate others double-dipping, but help upper crust triple-dip

July 1, 2019

Under $255 p.a.  for those below the top of the bottom bracket, $11640 for those on over $200,000 p.a. in the Oz “benefit the workers” tax cuts. Would you believe the Australian Government’s ruling coalition want to spend $102.5 billion for changes benefiting taxpayers including the top 5%, then $41.7 billion for the top 5% alone?

The Liberal/National coalition want to give these tax cuts in 3 lots, shifting tax brackets upwards and removing the top bracket.

Media reports on the three part tax legislation suggest that only the third  part benefits those on $180,000 dollars per year. This is untrue. The 1st part reduces the tax for all taxpayers, the second for middle income and above, and the third benefits only the top 5% of taxpayers.

For the lowest taxable income range,  the low and middle income tax offset is part of the tax system. From 2018-19 it will provide a tax reduction of up to $255 for people with taxable incomes of $37,000 or less.  For taxable incomes of between $37,000 and $48,000, the value of the LMITO increases at a rate of 7.5 cents per dollar to the maximum offset of $1080. Once somebody earns $90,000, the offset phases out at a rate of three cents in the dollar to $126,000.

For the From July 1, 2018, the Government  is increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000, meaning a tax cut of up to $135 per year for those on that range – and giving a tax cut of the full $135 to those above that range. But they also get the tax offfset – reducing by income as they move up the bracket.  The middle of the range get little effective increase.

From July 1, 2022  those on  $90,000 to $120,000 will shift from the 32.5 to the 30% bracket, a tax cut of  $1,350 per year for taxpayers above this level.

By July 1, 2024, people on incomes of $200,000, where the top tax rate of 45 per cent kicks in, will receive $11,640 in annual tax savings – with extra income taxed at 45% if their income is higher.

Meanwhile, the MAXIMUM benefit to the lowest tax bracket, including the tax offset,  is $255 .

There is no increase in the current system for those on below-taxable income such as those on intermittent contracts, who end up on incomes barely above the age pension, or those on benefits.

Consider the cost of this triple-dipping:

According to the Parliamentary Budget Office (PBO) figures obtained by the Greens, the long-term cost to the federal budget of tax cuts would be as follows:

  • Increase the upper threshold for the 32.5 per cent marginal tax rate from $87,000 to $90,000 from 1 July 2018: $6.5 billion.
  • Low and middle income tax offset of up to $530 for individuals with taxable income up to $125,333 for the 2018-19, 2019-20, 2020-21 and 2021-22 financial years: $15.9 billion.
  • Increase the upper threshold for the 32.5 per cent marginal tax rate from $90,000 to $120,000 from 1 July 2022: $36.5 billion.
  • Increase the upper threshold for the 19 per cent marginal tax rate from $37,000 to $41,000 from 1 July 2022: $40.8 billion.
  • Increase the low income tax offset to up to $645 for taxable incomes up to $66,667 from 1 July 2022: $2.8 billion.
  • Increase the lower threshold for the 45 per cent marginal tax rate from $180,001 to $200,001 from 1 July 2024: $9.1 billion.
  • Remove the 37 per cent marginal tax rate, so that all income from $41,001 to $200,000 is taxed at a marginal rate of 32.5 per cent from July 1, 2024: $32.6 billion.

Yes,  $102.5 billion for tax cuts for taxpayers including the top 5%, then $41.7 billion for the top 5% alone.  Under $255 for those below the top of the bottom bracket, $1,1640  for those on the top bracket.

Rather than having the third part of the tax changes, the Government should increase basic benefits such as the aged pension and Newstart to cover the actual cost of living in poverty, and change the basis of future increases from the full CPI (which has been kept flat by decreases in costs for items which the poorest cannot afford) to the CPI for those on benefits – which is already monitored by the Bureau of Statistics. This would make a greater boost to local business than an increased refund for those who can afford overseas holidays.