Real wage growth gives a convenient smokescreen for Labor’s tax addiction | Caleb Bond
Real wages have gone up this year but so has the government’s appetite for your money, writes Caleb Bond.
The federal government needs to go into rehab. They are certified tax addicts.
This week’s Mid Year Economic and Financial Outlook demonstrated just how much you are being shafted by money-grubbing politicians.
It revealed that income tax receipts will increase $21.5bn more than expected over the forward estimates.
Income tax alone is expected to rake in $496.07bn this financial year.
Just a decade ago that number was $258.8bn – around half of what it is today.
All tax revenue across all levels of government, according to the latest ABS data, increased from $432.7bn in 2013-14 to $755.8bn in 2022-23.
That far outstrips the rate of inflation.
And yes, there has been significant inflation over the past decade – about 30.5 per cent – but not enough to explain a doubling of income tax revenue.
The working population between November 2014 and November 2024 increased by 25 per cent and yet income tax receipts jumped by 92.24 per cent.
Bracket creep is a real problem and while the governments might pretend to fix it, they don’t really.
And they don’t want to because it’s worth so much money.
The Albanese government fiddled with the Stage 3 tax cuts despite promising not to do so and told every Australian that they would receive a tax cut.
But was it really a tax cut if tax revenue has since been revised upwards?
Stage 3 tax cuts were, in their original form, designed to address bracket creep.
Treasurer Jim Chalmers essentially killed it.
Your wages may well have grown but the share of that income taken by the government in tax has increased.
Tax as a percentage of GDP will reduce from 23.7 per cent last financial year to 23.4 per cent this financial year, according to MYEFO, before rising again to 23.5 per cent until 2027-28. But for the past 15-odd years that number has averaged just under 22 per cent.
The ABC calculated that as meaning an extra $45bn in taxes every year when adjusted for inflation.
Yes, you have more money than you used to – but the government takes more of that money than they used to.
Big government means big taxes and big spending which, as the Reserve Bank has continually pointed out, is one of the main drivers of inflation.
There have been seven straight quarters of household GDP decline – the longest household recession in half a century.
Dr Chalmers crowed on Wednesday that there has been economic growth, albeit slow, and real wages growth.
The economy hasn’t actually grown. It has simply been propped up artificially by high migration and growth in the public sector.
And while real wages have grown this year, households have spent less so they certainly don’t feel any better off.
Dr Chalmers’ wage growth and tax cuts are just a smoke screen.
We need genuine tax reform now.
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