The budget is rocket science, its the detail that's hidden!Part of an article By Ben Hillier
The Treasury estimated that by 2024 the overall tax rate of a person on half the average wage would jump from 10.3 to 17.8 percent – a 73 percent increase. By contrast, the tax payments of someone on the average wage would increase 21 percent; for someone on twice the average wage, they would increase 12 percent.
It’s important to note that those on the average wage (or above it) make up only a fraction of all income earners – about 15 percent according to the Australia Institute, a think tank. So when the government last year announced a rise in the threshold for the second-highest tax bracket from $80,000 to $87,000 per year, Scott Morrison lied when he called it a win for “middle income Australians” against bracket creep.
That will be true in perhaps 15 years, once inflation increases the nominal value of wages and more of the population are pushed up the income scale. But for now it is $1 billion per year relief for the wealthiest people in the country.
By contrast, according to Deloitte Access Economics, the budget expects that the number of taxpayers earning less than $87,000 will increase by about 3 percent over the next five years. Yet income taxes collected from them will increase by 18 percent – an extra $11 billion a year by 2021.
The assumptions about wage increases underpinning these figures might be unrealistic. As many people have pointed out, wages are growing at historically low rates, so bracket creep will occur more slowly than projected. But that only underlines that workers are damned while wages stagnate, and damned in a different way if they grow.
While it raids the wages of the working class, the Coalition has locked in $2.3 billion in business tax exemptions and concessions, the $1 billion a year tax cut for the rich and more than $25 billion of company tax cuts. Its full program of corporate tax cuts would cost more than $65 billion over a decade. And we now know that in 2027 the cost would be $15 billion and grow each year after that.