The October federal budget unveiled $17.8 billion of tax cuts would be brought forward in a bid to encourage spending in the economy and help household budgets. This provides tax reductions worth up to $2745 for singles, in part by increasing the top earning thresholds of the 19 per cent and 32.5 per cent tax brackets. These cuts are expected to kick in on Monday.
However, the federal government did not bring forward a third stage of cuts, due in 2024, which bring the majority of taxpayers under the 30 per cent marginal tax rate. This means someone earning $180,000 a year pays the same marginal tax rate as someone paid $60,000.
Mr Bandt takes umbrage with this part of the scheme in particular, saying it was “frankly disgusting” and “economic inequality on steroids” in a copy of the speech seen by this masthead.
“These tax cuts don’t just strip money away from public schools and hospitals, they make inequality worse,” he will say, adding the funds should instead be spent on public schools, hospitals and investment. “With a million people unemployed and many more struggling to find secure work, it is now just the Greens who are left fighting in Parliament to put the millions ahead of the millionaires.”
The stage three tax cuts kick in by 2024, after the next election, and the Greens plan to fight to stop these cuts from coming into effect. This would include pushing Labor, which backed the cuts revealed in the budget, to align with the Greens against stage three.
The federal government’s budget documents say that in 2020-21, the majority of benefits go to those earning under $90,000.
The Grattan Institute says the next stage of the cuts will leave the tax system less progressive, and left-leaning think tank The Australia Institute has also argued the majority of benefits flow to the wealthiest Australians. Bankwest Curtin Economics Centre figures show almost all workers will benefit this year but the end of the low and middle-income tax offset for the 2021-22 financial year means low and middle-income earners may be worse off in future.
But Deloitte’s Chris Richardson is among those hitting back at suggestions this round of cuts are unfair, with previous research showing when the cuts kick in, the top 10 per cent of earners still contribute 45 per cent of total income tax collected. This is on par with current collections and aligns with Treasury modelling showing a relatively similar share of tax overall will be collected from the wealthy with the cuts as they would without them.