Everybody thinks they pay too much tax but this group is unhappier than others

Anthony Albanese’s overhaul of the $300 billion stage 3 tax cuts has failed to offset the financial squeeze felt by the nation’s middle-income earners, a wide-ranging survey of workers has found while showing the surge in rents has led most people to support an overhaul of negative gearing.

The annual survey of Australians’ attitudes towards the tax and welfare system, conducted by the left-leaning Per Capita think tank, shows both sides of politics will struggle to make promises supported by a majority of voters as they demand more services, higher taxes on businesses and high-income earners but less tax on themselves.

Prime Minister Anthony Albanese’s revamp of the stage 3 tax cuts have not been enough for many Australians.Credit: Alex Ellinghausen

Carried out since 2010, the annual survey was conducted late last year, well after the Albanese government’s revamped stage three tax cuts started flowing to all Australian workers.

Under the revamped cuts, a person earning $100,000 enjoyed a $2200 tax cut or more than $42 a week. While cuts for high-income earners were reduced, a person on $200,000 received a $4529 reduction in their annual tax bill.

But the survey showed that for the first time, all workers earning more than $80,000 agreed that they paid too much tax. Until this most recent survey, only those on more than $200,000 believed they paid too much tax.

Among those earning between $80,000 and $100,000, 55 per cent said they paid too much tax, a 6 percentage point increase on the proportion recorded in 2023. Less than 40 per cent said they paid about the right amount.

It was the second-highest proportion of any income group, behind only those on more than $200,000 a year, 63 per cent of whom said they were over-taxed.

Even among the lowest income earners, a large proportion believes they too much tax. Of those people earning less than $20,000, more than 40 per cent said their tax burden was too high. The tax-free threshold, under which no income tax is paid, is $18,201.

Across all income levels, 47 per cent of people said they paid too much tax, the highest proportion on record.

Report author Emma Dawson said the survey was carried out five months after the stage 3 tax cuts started flowing to Australians.

“They clearly reflect the relentless financial pressure on middle-income households over the last two years, due to the surge in inflation in 2021-22 and significantly increased housing costs because of successive interest rate rises and low rental vacancies,” she said.

On Sunday, Opposition Leader Peter Dutton left open the option of tax cuts if the Coalition is to win this year’s election, but any cuts would hinge on the health of the budget, which is currently forecast to be in deficit for the next four years.

“We want to reduce taxes wherever possible, but we’ll be dictated to by how much money is left in the bank. We’re not going to act in an irresponsible way. If we can afford tax cuts, then they’ll be delivered,” Dutton told Sky News.

The financial pinch caused by high rents, which have climbed by almost 20 per cent over the past three years, also contributed to a large swing in the number of people who were supportive of overhauling negative gearing.

Just 15.1 per cent of respondents said negative gearing, the ability to write off rental losses against a person’s total income, should remain unrestricted. Two years ago, more than 30 per cent of those surveyed supported current negative gearing regulations.

Surging rents have prompted many people to support changes to negative gearing.Credit: Courtney Kruk

A fifth of those questioned said negative gearing should be abolished, while a similar proportion said it should be restricted to affordable and new homes.

The survey also revealed people want governments to spend more on health and education. More than two-thirds said they wanted more spending on public services: less than 10 per cent said spending was too high.

To cover the extra spending, three-quarters of those questioned agreed that big businesses do not pay enough tax; 65 per cent said high-income earners should pay more; and 81 per cent said corporate tax avoidance was hurting government spending.

Last week, the Business Council of Australia used its submission on the upcoming federal budget to argue for the corporate tax rate to be reduced to 25 per cent and for businesses to be offered a 20 per cent investment allowance.

The least popular way to raise revenue was a broad-based land tax or a lift in all income tax rates. Less than 15 per cent supported changes to the GST, including a higher rate or extending it to education and health services.

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