The big problem with the $80K tax cut
PEOPLE who earn more than $80,000 a year are the only Aussies to receive an income tax cut in the Budget. But here’s why the government is unlikely to win any votes from it.
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SCOTT Morrison tried. He really did.
He went in with a heartfelt pitch targeting average Australians. But by the time his compassion was proved misguided, it was too late.
Details of income tax cuts to Australians earning more than $80,000 — the “average” wage in Mr Morrison’s view — came ahead of the Budget announcement, but after it was signed, sealed, and ready to be delivered.
The announcement on Budget eve was met with raised eyebrows and a whole lot of mythbusting by the estimated 75 per cent of Australians earning less.
Mr Morrison was referring to the average fulltime wage, not the wages of all workers, which is the first problem.
The second is, this tax break he’s proudly selling effects only a handful of Australians, and they’ll hardly be better off for it.
As the Treasurer declared last night, increasing the middle income tax bracket from $80,000 to $87,000 prevents the 500,000 Australians earning within that range creeping into the second highest tax bracket and having to pay more income tax, which is 37 cents in the dollar.
What’s lacking in a lot of the commentary around this is that the pre-Budget tax brackets mean 37 cents is only applied to every dollar earned over $80,000.
That’s now being lifted to $87,000, meaning the greatest benefit anyone in the middle income tax bracket and beyond will get is $315.
For someone earning more than $80,000, $315 is not a whole lot of money. It’s around $6 a week.
It’s a coffee or two with your brunch on Saturday. It’s a fancy dinner or a new frock or two. It would barely cover two weekly trips to the farmers markets.
That extra $6 hardly makes a dent in grocery bills, school fees, childcare payments or health care costs.
The Treasurer is right that the tax cuts will provide relief, but it’s hardly anything to be beaming about.
The tax cuts will cost close to $4 billion over four years and there’s no pay packet relief for people earning under that threshold.
Greens MP Adam Bandt has slammed the Government for offering this relief to wealthy Australians while ignoring those who need it.
“We don’t need it. Ordinary Australians do and they miss out in this Budget,” he said.
“That’s $4 billion less for schools and hospitals just so that above-average income earners can get a $6 a week tax cut that won’t even buy them a sandwich.”
Opposition leader Bill Shorten said: “This is a Budget which favours the millionaires over the battlers. The high income earners over the families.”
Senator John Madigan called it an “unprincipled attack on low-income earners, the disabled, students and families”.
When he delivered the news last night, Mr Morrison did acknowledge the tax cuts might not satisfy all.
“Of course we would like to do more, but this is what we can afford today,” he said.
And it’ll be up to Australians, average and otherwise, to see if Mr Morrison gets another chance to do more at the election in two months’ time.
Originally published as The big problem with the $80K tax cut
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