Australians are set to receive their long-awaited tax cuts, as minimum wage workers get a pay rise and everyone gets relief on their electricity bills.
July 1 not only marks the start of the new financial year but also the debut of Labour’s revised Stage Three tax cuts and a raft of measures to help with the cost of living crisis.
Treasurer Jim Chalmers insists these benefits will not worsen Australia’s inflation crisis or trigger another interest rate hike, amid fears the Reserve Bank could inflict more pain in August.
“The tax cuts that will apply to all taxpayers from Monday fit the same parameters that had already been taken into account in the Reserve Bank and Treasury forecasts,” Dr Chalmers said on Friday.
“We have also made sure that when it comes to energy bill relief and cheaper drugs and Commonwealth rental assistance, these are designed to put downward rather than upward pressure on prices.”
Here’s what you need to know about wasting cash.
Third Stage Tax Cuts
Australia’s 13.6 million taxpayers will get relief on July 1, but Labor’s revisions to the previous Coalition government’s stage three tax cuts will see further incentives for low- and middle-income earners.
Part-time workers earning $45,000 a year – or less than the new full-time minimum wage of $47,627 – are receiving $805 a year instead of nothing.
Those earning $80,000 (slightly more than the average salary of $74,500) receive $1,679 instead of $875.
Australians are set for their tax cuts, as minimum wage workers get a pay rise and everyone gets relief on their electricity bill.
The Labor Party has maintained the 37 percent tax bracket for those earning between $135,000 and $190,000.
Meanwhile, the 45 percent tax bracket will begin to apply at $190,000 instead of $200,000.
That means high earners earning $2,000,000 will receive $4,529 instead of the original $9,075.
Increase in minimum wage
Australia’s 2.7 million lowest-paid workers will receive a 3.75 per cent rise on Monday, boosting their hourly wages by $24.10 and raising their weekly wages to $915.90.
These minimum wage increases are often replicated in national awards, but the wage increase will be lower than the 4 percent inflation rate in May, meaning they will suffer a cut in real wages.
Justin Smirk, senior economist at Westpac, said the rise is unlikely to lead to a rise in interest rates because the Fair Work Commission only awarded a low increase.
“The RBA would feel comforted by the decision,” he said.
‘The FWC noted that they not only considered the increased cost of living for workers affected by the decision, but also took into account the realigned stage three tax cut and broader cost of living relief those workers will receive from July 1.’
Australia’s 2.7 million lowest-paid workers will receive a 3.75 per cent rise on Monday, increasing their hourly wages by $24.10 and taking their weekly wages to $915.90 (pictured, a barista in Parramatta, Sydney).
Electricity Rebates
Everyone, regardless of income, will receive $300 electricity rebates starting July 1, in four quarterly installments of $75.
This rebate only lasts one year, raising fears that inflation will rise again once it ends in June 2025, or even fail to reduce inflation as promised.
Unlike a previous $500 rebate for seniors and healthcare cardholders, this $300 rebate, which costs the Budget $3.5 billion, will not be means-tested.
Prime Minister Anthony Albanese promised in the last election to reduce average annual electricity bills by $275 by 2025.
But in the year through May, electricity bills rose 6.5 percent, higher than inflation.
The Reserve Bank left interest rates unchanged this month at a 12-year high of 4.35 percent, but in the accompanying statement, it backed the electricity rebate as a form of government spending that will not boost inflation.
“The recent budget results may also have an impact on demand, although federal and state energy rebates will temporarily reduce overall inflation,” he said.
“The persistence of service price inflation is a key uncertainty.”
Commonwealth Rental Assistance
While Dr. Chalmers discussed the 10 per cent increase to Commonwealth rental assistance, this measure will not come into effect until September 20.
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