Australians with below-average salaries could get $875 back when new tax cuts take effect in July next year – just as inflation eases to more normal levels – despite the Greens claiming they are only helping the wealthy.
Greens leader Adam Bandt took the opportunity to slam Labor over the cuts, which Treasurer Jim Chalmers has committed to, on a tweet showing ‘Mr Lambo’ Adrian Portelli of The Block tapping his supercar into has his $43 million Melbourne penthouse hoisted.
“Labour is giving this man a $9,000 tax cut while people are starving on $52 a day,” Bandt said furiously.
Bandt’s story has been repeated many times by Patricia Karvelas, the ABC’s influential breakfast presenter, who asks most of the ministers who guest on the program whether Labor will ‘rethink’ the third phase of tax cuts.
In an interview with Arts Secretary Tony Burke in March, Karvelas, citing Bandt, asked whether a cost-of-living crisis meant the cuts would not go through.
“People are very concerned about their ability to pay for basic things,” she said.
“So can you also justify the phase three tax cuts?”
However, the cuts are certainly not just for the wealthy. And tax relief — costing the state coffers $69 billion over four years — will be a welcome reward after a year marred by 11 rate hikes and higher electricity and food prices.
Labor is going ahead with the stage three tax cuts, having backed it in opposition in 2019 after former Liberal Prime Minister Scott Morrison won a third term for the coalition.
The introduction of a new 30 per cent tax bracket for Australians earning $45,000 to $200,000 a year means middle, middle and upper income earners will benefit.
Those with $80,000 would get $875 back on their tax returns for fiscal year 2024-25, compared to 2023-24 and 2022-23.
Australians with $60,000 – a level slightly below the median income of $65,000 – get back $375.
Australians with below-average salaries could get $875 back when new tax cuts take effect next July – just as inflation eases to more normal levels (pictured is a Sydney hospitality worker)
The tax cut — which has cost the state coffers $69 billion over four years — will be a welcome reward after a year marred by 11 rate hikes and higher electricity and food prices
What do you get back under stage three
$60,000: $375 if tax rate drops from $11,067 to $10,692
$80,000: $875 as tax rate falls from $18,067 to $17,192
$120,000: $1,875 if tax rate drops from $31,867 to $29,992
$150,000: $3,975 if tax rate drops from $43,567 to $39,592
$200,000: $9,075 as tax rate drops from $64,667 to $55,592
$250,000: $9,075 as tax rate drops from $88,167 to $79,092
$300,000: $9,075 as tax rate falls from $111,667 to $102,592
Tax liabilities for 2024-25 compared to 2022-23 and 2023-24
But higher-income earners will fare much better, with those with $120,000 getting back $1,875.
Those with $200,000 will get back a very generous $9,075 as the main beneficiaries of the number of tax brackets being cut from five to four on July 1, 2024 for the first time since 1984.
Despite some misgivings about the costs, Treasurer Jim Chalmers defended Labour’s decision to keep them in the 2023-24 budget, which was announced Tuesday night.
“We have not changed our stance on the phase three tax cuts,” he told ABC News again on Wednesday.
The Treasury Budget papers did not specify the cost of the third phase tax cuts, but on Tuesday night, Dr. Chalmers said they would cost $69 billion over four years.
“They were legislated some time ago and because the government’s position on them hasn’t changed, they wouldn’t normally be specified as a new spending initiative would be,” he said.
“The four-year cost, the estimated cost of the stage three tax cuts is bigger because there’s an extra year in the forecast, I think in the order, last time I asked, of about $69 billion over the course of the future estimates . ‘
Taking into account the phase three tax cuts, the Treasury Budget papers predict that inflation will ease to 3.25 percent in June 2024 – a level only slightly above the Reserve Bank’s target of 2 to 3 percent.
That would be less than half the current level of 7 percent, which was a moderation from the 32-year annual rate of 7.8 percent in the December quarter.
Treasurer Jim Chalmers (pictured with his wife Laura) confirmed that the Phase Three tax cuts would cost $69 billion over the first four years
New phase three tax brackets
$18,200 and under: Nothing
$18,201 to $45,000: 19 percent
$45,001 to $200,000: 30 percent
$200,001 and up: 45 percent
Under the phase three tax changes, the existing 37 percent for those making more than $120,000 will be abolished and replaced with a 30 percent bracket for those making $45,000 to $200,000.
The top marginal tax rate of 45 percent would be raised from $180,000 to $200,000, with the top 3.6 percent of income earners the biggest gainers – much to the anger of the Greens.
Shadow Treasurer Angus Taylor rejected Greens leader Adam Bandt’s call for phase three tax cuts to be scrapped to fund a more generous increase in Social Security instead.
“Well, you know, we want all Australians to be better off,” he said on Thursday.
“I mean, this idea that the Greens perpetuate and unfortunately was in the budget, that the only way to make someone better off is for someone else to be worse off.”
The opposition calculated that Australians with a $750,000 mortgage are now $25,000 a year worse off due to rising interest rates and higher prices for food and electricity, plus an end to the former coalition government’s tax deductions for low and middle income earners for those living up to $126,000.
This gave $1,500 to those who earned $48,000 to $90,000 — including $1,080 in compensation and a one-time payment of $420 toward living expenses, until it expired on June 30, 2022.
Mr Lambo came first from the Greens due to his high salary (above)
Greens leader Adam Bandt used Adrian Portelli’s supercar stunt to push through the tax cuts