Will the Budget pay?
Last night Scott Morrison unveiled the tax cuts he hopes will provide him an electoral bounce. His plan, he hopes to legislate, will mean 73% of Australians, earning between $41,000 and $200,000 will pay no more than 32.5% tax by 2024-25. A little context might go a long way to understanding what these tax cuts actually mean.
In the current financial year 53% of tax payers earning between $37,000 and $87,000 pay 32.5% tax on their income. A trip down memory lane to June 2000, just a week before the introduction of the GST the then Prime Minister, John Howard, said “Four in every five taxpayers will be on a top rate of 30 cents in the dollar or less.” So even if ScoMo’s plan is followed through in six years, and possibly three elections time, it appears that more taxpayers are still paying more tax than in 2000. But why let history get in the way of selling it?
This is clearly a Budget to take the election. Just a quick look at census data in some of the Government’s most marginal seats shows the demographic they are targeting. The median annual salary in Capricornia ($73,736), Forde ($76,076), Gilmore ($53,976), Flynn ($67,808) and Robertson ($67,808) are all squarely in the Government’s tax cuts income brackets. People in this income bracket can easily creep into the next tax bracket through income rises or through working overtime for more money.
ScoMo’s last budget was a shock to those who voted for him, dubbed a Labor Lite budget. This one appeals to his conservative base and middle Australia. No doubt he hopes that working Australians with a few more dollars in their pocket return him to his job on election day.