Federal Budget 2016 unlikely to bring many Australians tax reflief

FOUR out of every five South Australian taxpayers are likely to miss out on relief in the Budget.

Treasurer Scott Morrison has indicated there won’t be many Budget ‘sweetners’. Picture: Kym Smith

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EXCLUSIVE

FOUR out of every five South Australian taxpayers are likely to miss out on relief in the Budget.

Analysis by The Advertiser reveals 79 per cent of the 686,000 South Australians who pay tax have income of less than $80,000 – the level at which cuts are expected to kick in. Nationally, 74 per cent of workers do not make enough.

Just 14 per cent of SA women taxpayers earn over $80,000, official ATO statistics show. About 27 per cent of the state’s men do.

Only small pockets of South Australia have average incomes above $80,000, such as North Adelaide, Oakbank, Malvern, Medindie and Roxby Downs.

Meanwhile, just 1 per cent of SA women taxpayers earn enough to benefit from the removal of the 2c-in-the-dollar “temporary Budget repair levy”, which affects those who make at least $180,000 annually. Three per cent of men do

It has been widely speculated federal Treasurer Scott Morrison will on Tuesday night reveal a plan to lift the starting point for the 37c tax bracket from $80,000 to perhaps $85,000.

If the speculation proves accurate — and the Turnbull government is re-elected — a person earning more than $85,000 will save $225 a year.

That is because $5000 more of their income will fall into the 32.5c tax bracket.

Treasurer Scott Morrison has a tough week ahead of him with the delivery of the Federal Budget. Picture: Kym Smith

The rumoured move has been billed as an attack on “bracket creep”, which is where wage inflation pushes a worker into a higher tax bracket, leaving them with less purchasing power because the price of goods and services are also rising.

And that makes lessening its impact a fair move, experts say, but doing so won’t add much to economic growth — or the Government’s chances of winning the July 2 poll.

“Bracket creep is a really ugly way to raise revenue,” said budget boffin Chris Richardson, an economist and director of Deloitte Australia.

“So there is a genuine fairness argument to be made.”

But raising the $80,000 threshold won’t grow the economy because people earning that much are working fulltime already, said the nation’s foremost cost of living expert, Ben Phillips.

“The groups who more are more likely to respond to lower tax rates are part-time workers such as women with children, older workers and those on welfare,” Mr Phillips, an associate professor at ANU, said.

“These people are mostly not earning anything like $80,000.”

Top pollster David Briggs said the tax cut wouldn’t win votes because it wasn’t large enough.

“It’s about a cup of coffee a week,” Mr Briggs, managing director of Galaxy Research, said.

“A fear of bigger taxes is more of a disincentive to vote for a party,” he said.

Originally published as Federal Budget 2016 unlikely to bring many Australians tax reflief