You’ll never see a cent of the Albanese Government’s tax cut | Caleb Bond
There’s a sneaky trick in government revenue raising the Albanese Government thinks you don’t know about, writes Caleb Bond.
Federal Budget
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Sorry, you’re not actually getting a tax cut.
The idea that you will is a scam but that’s exactly how the federal government likes it – they get to pretend they’re handing out tax cuts knowing full well they’ll make it all back on bracket creep.
It’s the dirty little secret of government revenue raising.
You earn more money, they take more of it from you. Simple as that.
Treasurer Jim Chalmers announced in his wafer-thin budget that the lowest tax bracket of 16 per cent would drop to 15 per cent on July 1 next year and 14 per cent the year after that.
That would mean a “cut” of $268 in 2026-27, equal to about $5 a week, that increases to $536 in 2027-28.
There’s only one problem. You won’t see any of that money.
The most recent data collected by the Australian Bureau of Statistics, from August last year, put median weekly earnings at $1396, which comes to $72,592 a year.
If you received a pay rise of 3 per cent this year, in line with the budget’s forecast for the wage price index this financial year, you’d now be earning $74,780 on which you’d pay $14,718 of tax.
Wages are predicted to rise by 3.25 per cent next financial year, which would take the median earner to $77,205, paying $15,494.
And in the 2026-27 financial year, when you get your first tax cut, wages are forecast to go up another 3.25 per cent, putting the median at $79,715.
Under the current tax regime you’d pay $16,297 – but benevolent Dr Chalmers will knock $268 off that and bring it to $16,029.
So despite being told you’ll get a $268 “tax cut”, the average Australian will be paying $1311 more income tax – when this alleged tax cut kicks in – than they are today.
That, my friends, isn’t a tax cut. It’s a con job.
You’ll be paying more tax than you are now but just a little less than they were going to take and for that they expect you to be grateful.
Well, they can go shove it.
A decade ago, income tax receipts were $258.8bn.
This financial year they’ll be $497.6bn – $1.5 billion more than in the mid-year economic update and 92.27 per cent more than 10 years ago.
Your wages haven’t doubled but the federal government’s have.
Next financial year, according to the budget, it’ll rake in $522.7bn of income tax and in 2026-27 – the year you get an, ahem, tax cut – it goes up again to $547.52bn.
By 2028-29 it’ll be $605.35bn – more than $100bn extra in just four years.
With all that extra money, you’d think we’d be paying off our national debt at a rate of knots, yet we’re about to hit $1 trillion of gross debt.
As revealed on Tuesday, young people are disproportionately affected by bracket creep. Millennial and Gen Z workers on median wages are paying as much as $3500 more income tax than three years ago.
There is a simple answer to all this: Index income tax rates in line with inflation.
It should be the easiest argument for the Coalition to make but it would require commensurate spending restraint and no one wants to commit to that.
Malcolm Fraser indexed tax in 1976 but abolished it in 1982.
The addiction to our money is, it would seem, hard to beat.
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