James Campbell: Budget holds small sugar hits and very few misses
THERE’S a lot to like in this Budget but it’s the long-promised income tax cuts where this government is going to be looking for the political sugar-hit, writes James Campbell.
James Campbell
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THERE’S a lot to like in this Budget. There’s a long-overdue ban on exit fees from super funds and a cap on fees for low-balance accounts. There’s more money to help the elderly stay longer in their homes.
And there’s lots and lots of money for road and rail projects in Victoria. This is happening while net debt is peaking and a surplus is due a year earlier than expected.
Worthy though all this stuff is, it’s the long-promised income tax cuts where this government — with a one-seat majority and in dire straits in the polls — is going to be looking for the political sugar-hit.
And the good news is, this Budget will see many people get money straight away — or almost straight away.
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Not too much money, mind you: a household with two people earning $75,000 a year will be $1060 better off from next financial year.
Most of this money will come in the form of an ATO rebate — which means, of course, that it won’t be paid until after the next election.
The downside on this front is that’s pretty much it for them for the next six years.
By the time the last changes to income tax kick in — in 2024-2025 — the same household will be only $1080 better off.
In contrast, a high-income household where both people earn $200,000 a year will only get $270 extra next financial year.
But from 2024-2025, they will be paying $14,450 less in tax a year — as you can be sure the Labor Party will be keen to remind us.
The best news of the whole Budget is abolishing the 37 per cent tax bracket and the raising of the top tax threshold to $200,000 a year, which will end bracket creep for most people.
How Bill Shorten reacts to this in the next few days could decide who wins the next election. If he plays it badly, it will be game over.
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