The biggest headline of this policy seems to be the elimination of the 37 per cent tax bracket for incomes between $120,001 and $180,000. Instead,this income range will now be taxed at a flat rate of 30 per cent – a very appealing decrease of 7 per cent for those lucky enough to fall into this already comfortable bracket.
On the surface this might sound like a win for the average worker,but from my perspective the reality of this decision is quite different. For high-income earners bringing in a flush $200,000 a year,the annual tax cut amounts to a substantial $9075 – the equivalent of $756 per month.
In contrast,a worker earning $50,000 will only experience a meager $125 tax cut peryear. The disparity is evident:the more you earn,the more you save under these changes. Albanese emphasises that the tax cuts begin at $45,000 to argue this is not a policy exclusively for the wealthy.
While technically correct,I would argue that the focus should be on ensuring that those in our community who are struggling to make ends meet became the focus of this change,especially given we are enduring economic uncertainty and experiencing the crippling cost of living.
Another major concern that I am also concerned about is the potential for the stage three tax cuts to contribute to our already rising rates of inflation.
The Grattan Institute’s economic policy program director Brendan Coates spoke with this masthead earlier this week and rightly criticised the decision to implement these cuts,arguing that injecting such a large amount of money into the economy in the face of inflation was economically unsound.