The rich to get huge tax cuts under Scott Morrison’s plan
Опубликованно 07.09.2020 01:15
Wealthy families on six figure salaries are on track to secure huge windfalls worth up to 20 times the value of low income and part-time workers under the legislated tax cuts by 2025.
That prompted a warning that the Morrison Government would be better off increasing welfare payments or tax cuts for low income workers if they really want people out spending to stimulate the economy.
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ANU Associate Professor Ben Phillips told news.com.au that the rich are more likely to stash tax cuts into savings accounts and pay off personal debts including credit cards and big mortgages, rather than spending the money and stimulating the economy.
“We know that people are saving at higher rates than ever. It will have some small impact. But most people would say you get a bigger bang for your buck with tax cuts at the lower income end or welfare,’’ he said.
The Australian Council for Social Services is urging the Morrison Government to deliver a permanent increase to JobSeeker before it fast-tracks tax cuts for the rich.
In a discussion paper, Restoring growth: Tax cuts or payments and services?, ACOSS warns bringing forward the tax cuts won’t stimulate the economy if the wealthy workers don’t spend the money.
“The second and third stages of the Government’s proposed tax cuts are skewed towards high income-earners. In the context of high household debt, much of these tax cuts will be saved,’’ the discussion paper states.
Wealthy Australians - including Prime Minister Scott Morrison - will be more than $11,000 better off under the proposed tax cuts.
“In contrast, a $75 a week increase in Newstart and related allowances for single people and single parents would mainly go to the poorest households and regions. Since they have little choice but to spend any extra dollar on essentials like food and rent, the money would be quickly spent, lifting jobs and growth in the regions that need it.”
The tax cuts the Morrison Government is considering bringing forward are worth $20 billion and are currently scheduled to come into force in 2022.
Treasurer Josh Frydenberg has repeatedly flagged he is considering bringing forward the tax cuts to help kickstart the economy.
“Again, we’ll provide those details when we get to the Budget, because obviously these are issues that are still under consideration and what we did take to the last election was a three-stage plan which would see the abolition of a whole tax bracket, 37 cents in the dollar tax bracket,’’’ he said.
“It would see 94 per cent of Australian taxpayers pay a marginal rate of no more than 30 cents in the dollar. One big tax bracket between $45,000 and $200,000. It’s important that people recognise that tax cuts put more money into people’s pockets. More money into people’s pockets means more spending and more spending means more jobs. But these are still under consideration, so I don’t want to add to the detailed speculation, you’ll have to wait until Budget day.”
Treasurer Josh Frydenberg points to a chart when discussing Australia’s recession yesterday. Picture: David Gray/Getty Images
The second stage of the tax cuts the Morrison Government has flagged it is most likely to bring forward will lift the income threshold when the 19 per cent tax rate kicks in from $41,000 to $45,000 and the rate at which the 32.5 per cent tax rate applies from $90,000 to $120,000.
A third stage of the tax cuts, with a tax rate of 32.5 per cent to apply to the vast majority of workers, is currently scheduled from 2024.
It will apply a 32.5 per cent tax rate on all income between $41,000 and $200,000.
That’s the tax change that will ultimately deliver the Prime Minister a $11,640 a year tax cut.
By comparison, a part-time worker earning $30,000 a year will secure just $255-a-year from the planned tax cuts.
A worker earning $75,000-a-year secured a $1080 a year tax cut under the original 2019 tax cuts rising to $1830 by 2025.
But the biggest benefits of the tax cuts kick in when workers are earning six figures.
While the tax cuts are worth up to $2565 for anyone earning over $120,000 from 2023 the windfall gains for high income earners keeps rising.
By 2025, or earlier if the tax cuts are brought forward, the tax cuts will deliver $4400 for a worker on $120,000 a year.
It’s low income workers who have not only borne the brunt of the COVID-19 recession but also delivered some of the biggest stimulus to the economy by raiding their super accounts to pay for general living expenses and purchases after they were stood down and laid off.
Labor’s treasury spokesman Jim Chalmers said the ALP would be “constructive” but wouldn’t sign on to proposals the Morrison Government had not even confirmed.
“Because the Government hasn’t announced that. They haven’t said that that’s exactly what they’re going to do,’’ he said.
“They’ve hinted that they might change some of the existing tax scales and thresholds and rates. I think it’s entirely responsible for us not to sign up to something that we haven’t seen. There’s not a blank cheque here. We’ll be responsible, we’ll be constructive, we’ll engage with any concrete proposals. But it doesn’t make a lot of sense for us to sign up for something when the Government still doesn’t even know what they’re going to do.”
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The rich to get huge tax cuts under Scott Morrison’s plan