Home Australia Federal Budget 2024: Record tax bill is set to hit Australia within just two years despite Labor’s massive stage three cuts

Federal Budget 2024: Record tax bill is set to hit Australia within just two years despite Labor’s massive stage three cuts

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Treasurer Jim Chalmers delivered his third budget Tuesday night.

Australia’s income tax collection will soar to a record level this financial year and taxpayers will be hit even harder in the future despite the Albanese government’s stage three tax cuts.

New budget forecasts released on Tuesday night show Australians will again be crushed by record income tax collections in just two years.

For the first time in the federal budget, Australia’s total income tax receipts will rise above $300 billion, reaching $334.6 billion this financial year thanks to low unemployment and strong wage growth.

The increase in tax revenue will mean that, under new budget projections, 52 percent of the total federal tax base will depend on income tax this fiscal year.

From there, income tax revenue will fall to $326.5 billion next financial year due to tax cuts, before recovering to reset a new record of $343.5 billion in the 2025-26 financial year.

Income tax collection is expected to rise further, the budget shows.

The Albanian government’s revised tax plan will give all Australians additional tax relief, with the move aimed at benefiting low- and middle-income people the most.

Workers earning $50,000 will receive a tax cut worth $929, those with a salary of $100,000 will benefit from an additional $2,197 in their take-home pay, while those earning $150,000 will receive an additional rebate of $3,729.

However, even with the stage 3 tax cuts, personal income tax collections have been revised upwards by $6.7 billion next financial year, and a further $25.1 billion over the five years to 2027. 28, compared to the updated mid-year figure.

“This reflects the strength of collections so far this year, which have been supported by stronger-than-expected employment growth and a rebound in wage growth,” the budget says.

By the end of the decade, the federal government’s reliance on personal income taxes will jump to its highest level since the turn of the century, according to a recent analysis by the independent budget watchdog.

As wage growth remains strong in the near term, a greater proportion of workers’ income will be taxed at a higher rate as Australia’s tax brackets do not adjust for inflation – the phenomenon known as “displacement of sections”.

Also helping to improve the country’s bottom line, the Commonwealth’s 10 per cent Goods and Services Tax (GST) is expected to raise $100 billion by the 2027-28 financial year.

A suspected drop in oil and gas prices has reduced the amount collected from the petroleum resources income tax by $750 million over the five years to 2027-28, compared with the December forecast.

Meanwhile, corporate tax collections have also improved from their December estimates, rising by an additional $5 billion to $142.9 billion, as strong commodity prices boost profits in the sector. miner.

Treasurer Jim Chalmers delivered his third budget Tuesday night.

Business taxes have also been revised upwards for the next financial year by $5.5 billion and $26.2 billion over the five years to 2027-28.

“Mining companies’ profits remain relatively unchanged overall relative to forward estimates, and higher commodity prices in the near term will be offset by lower export volumes in all years,” they state. the budget documents.

“The strength of corporate tax collections in recent years of forward estimates is also supported by an improving outlook for the non-mining sector.”

The budget has delayed the start of an expected fall in prices for iron ore, Australia’s most valuable export.

Total federal tax receipts will hit an 18-year high of 23.8 percent of GDP in the current fiscal year, the highest since the Howard government’s penultimate budget, newspapers showed.

The previous coalition government introduced a self-imposed 23.9 per cent cap on tax revenue as a percentage of the economy, which is based on the average recorded during the Howard government.

Treasurer Jim Chalmers has previously stated that the tax-to-GDP cap is an arbitrary figure, motivated by political rather than economic reasons, and he does not feel constrained by the figure, despite having met the target.

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