Millions of Aussies to be ‘short-changed’ by tax cuts

New research has shown that planned tax cuts would overwhelmingly help men on high incomes, while millions of Aussies would save just $2.40 a week.

Tax cuts planned to take effect in two years time would spell “disaster” for women and overwhelming benefit men on high incomes, new research has found.

It revealed that someone on a salary of $200,000 a year would gain $174 a week in tax relief, yet those earning $50,000 would save just $2.40 a week, according to analysis of tax office data by the Australia Institute.

Due to come into effect in 2024-2025, the stage three tax cuts are worth $184 billion over a decade, and would see men get twice as much of a tax cut as women, the analysis found. Disturbingly, over half the savings would go to the top 10 per cent of income earners in Australia – who are overwhelmingly men.

The new tax measures would see everyone earning between $45,000 and $200,000 paying 30 per cent in tax from 2024.

It will also scrap the 37 per cent tax bracket for those earning above $120,000, making those earners the biggest winners from the cuts.

The top tax bracket will also be raised to start at $200,000 compared with $180,000 now.

Women are disadvantaged by the tax cuts. Picture: iStock

‘Short changed”

Similar research found that the average annual tax cut for a man would be $1430, almost double that for a woman at $730, according to analysis by the parliamentary budget office for the Greens.

It stacked up against Australia Institute’s findings too that for every $1 of tax cuts for women, men receive $2.

“A rigorous analysis of the government’s tax plan shows that Australian women will be short-changed by a factor of two to one,” said Matt Grudnoff, senior economist at the Australia Institute.

“To cherry pick data and claim that women are better off than men is disingenuous at best.

“We encourage the government to publicly release the data informing their gender claim so the public can analyse its veracity.”

Treasurer Josh Frydenberg’s office released data recently that claimed that more than $14.4 billion in tax relief had been delivered to 5.2 million women since the 2018-19 fiscal year to the end of 2021.

Mr Grudnoff said their research showed that the idea young women have the most to gain from the legislated tax cuts was a “complete furphy”.

“The stage-3 tax cuts will only serve to further entrench wealth inequality between men and women,” he added.

Matt Grudnoff, economist at The Australia Institute. Picture: Richard Jupe

‘Not all trust fund kids’

The Australian Institute also found the bottom 20 per cent of earners, largely dominated by women, will get nothing at all in terms of tax relief under the changes.

Meanwhile, only 3.5 per cent of taxpayers sit in the top tax bracket by earning more than $180,000 a year, yet that group will gain a whopping 45 per cent of the tax savings.

Leading accountant Ben Johnston said the proposed tax changes don’t make “a lot of sense”.

“The third phase of it has people earning between $45,000 and $200,000 paying 30 per cent tax so the more you are earning, the bigger tax savings you get, so to me it doesn’t make a lot of sense … and it becomes unfair,” he told news.com.au.

But he said he also doesn’t agree with the argument that higher income earners should be forced to pay more tax.

“It’s not all trust fund kids, it’s people who work 100 hour weeks and sacrifice and to get a tax grab from them is quite unfair,” the managing director of Johnston Advisory said.

“Not everyone is gifted a high income, most people study hard and work hard … and are not on $400,000 a year just sitting at a desk or going on boozy lunches. The rhetoric they should be copping a lot more tax is not always fair.”

Managing director of Johnston Advisory, Ben Johnston.

Stark difference in savings

The analysis released by the Greens also found that for the first year the tax cuts are introduced, the top 1 per cent of income earners would pocket $1.3 billion in taxes, which was almost twice the $700 million saved by the entire bottom 60 per cent of earners.

Over the next 10 years the top 1 per cent would enjoy $11.8 billion in savings, compared with $12.7 billion for those in the 60 per cent of earners.

Greens leader Adam Bandt said spending $184 billion on the tax cuts was more than triple the sum spent by the Rudd-Gillard Labor government to protect Australia during the global financial crisis.

“Liberal and Labor have agreed to kill Australia’s progressive tax system,” he said. “This great leap rightwards is a trickle-down disaster for the country.”

In a bid to secure female votes, Treasurer Josh Frydenberg had talked up the Morrison government’s efforts to give Australian women a better financial deal.

Mr Frydenberg’s office says that since 2018-19 to the end of 2021, each Australian woman is $3130 better off, on average, as a result of tax cuts.

It says unpublished Australian Taxation Office data showed young women had benefited the most.

“Young Australian women under 24 have seen the amount of tax paid decline by more than 20 per cent, the largest percentage decline in the amount of tax paid compared to every other cohort,” the Treasurer’s office said on Sunday.

Greens analysis showed the top 1 per cent would gain $1.3 billion in savings, compared to just $700 million for the lowest 60 per cent of income earners. Picture: Getty Images

No more tax cuts

The Australian Council of Social Service (ACOSS) has called on the Federal Government to prioritise investment into critical services and boosting the incomes and wages of those in the bottom 40 per cent, over more tax cuts in the upcoming budget.

ACOSS CEO Dr Cassandra Goldie said people on lower incomes don’t pay much income tax because their wages are already so low.

“Over three-quarters of the value of stage three of the tax cuts starting in 2024 will go to the top 20 per cent by income on $102,000 or more, and only one-third will go (to) women,” she told The Guardian.

Originally published as Millions of Aussies to be ‘short-changed’ by tax cuts