Why some of us are really unhappy about the Budget
THE Government's move to dramatically flatten the tax system has been criticised on social media as a "tax cut for the rich".
Last night Treasurer Scott Morrison announced that the government would remove a tax bracket over the next seven years.
This means that by 2024, people earning between $41,000 and $200,000 will pay a single rate of just 32.5 per cent of their income.
The expanded bracket will encompass 94 per cent of taxpayers under the single bracket, compared with just 63 per cent today.
It will cost $140 billion over 10 years.
At the moment, anyone earning below $87,000 pays a tax rate of 32.5 per cent, while people earning $87,001-$180,000 pay 37.5 per cent.
In other words, people earning over $90,000 will effectively get a tax cut by 2024.
Social media users slammed the single widened bracket as unfair:
Why should someone on $37K be in the same tax bracket as their boss's boss on $200K? One will get a $4/week tax cut and the other $140/week https://t.co/ym09GBvc25— Sally McManus (@sallymcmanus) May 8, 2018
Morrison has planned some of Aust’s biggest tax changes, w/ a proposal to abolish the 37% tax bracket in its entirety from July 2024, meaning all Austn’s earning from $41,000 up to $200,000 will pay a flat tax rate of 32.5%.— Sam W (@sammmw8) May 8, 2018
That sounds very fair!👀🤷♂️🤔#Budget2018 #auspol
In future, the govt wants everyone earning between $41,000 and $200,000 to pay the same flat tax rate of 32.5% ?— Roselina Press (@roselinarose) May 8, 2018
That’s a tax cut for the wealthy. #budget2018
The rate above $200,000 will remain at 45 per cent, which currently applies to earnings over $180,000.
The Government's plan to give low and middle-income earners a tax break of $530 also sparked a strong reaction, both in the lead-up to and during the Budget.
It's expected to deliver around $10 extra per week - likened to "burger and milkshake" cuts - which people said could be better spent on public services.
The hashtag #KeepMyTenDollars has been trending since yesterday afternoon.
#keepmytendollars and put it towards literally anything Tony Abbott would describe as a 'handout'.— Jo Thornely (@jothornely) May 8, 2018
#keepmytendollars and put it towards Newstart. It's unacceptable that people are so low on $$ they are forced to choose between food and tampons.— Jill Moran (@Jill_Canberra) May 8, 2018
If you #keepmytendollars and invest in:— Van Badham (@vanbadham) May 8, 2018
- public housing
- renewable energy
- public transport
- effective local waste recycling
- river/forest/land rehabilitation
- science investment
- arts and cultural funding
YOU’LL CREATE JOBS.#auspol
The immediate tax cuts for low- and middle-income earners will cost the Government $13.4 billion in lost revenue over the next four years.
What the Budget papers don't make clear is how much it will cost to extend the cuts to higher income earners in 2024-25.
The Budget papers say the tax cuts will encourage Australians to take on additional work, seek promotions and improve their skills - without worrying about the pesky taxman taking more from their pockets.
The measures are also designed to increase disposable incomes to relieve household budget pressures.
The changes will also make the tax system simpler and account for inflation and wage rises, the Budget papers say.
The Treasurer said the $530 tax cut would make a big difference to average families.
"For middle-income households with both parents working on average wages, this will boost their kitchen table budget by more than $1000 every year," Mr Morrison said in his Budget speech.