Huge tax cuts are coming and a group of Australians will be the biggest winners. Here is everything you need to know.
Despite a crushing rise in the cost of living, it is well-off Australians who will get the biggest tax break, with Anthony Albanese vowing to press ahead with tax cuts that disproportionately benefit high earners.
The prime minister warned of the pain ahead as he admitted the government will have to put a hard cap on spending when it delivers its first budget and delivers on commitments made by Labor in the election.
However, by far the biggest single spending, the Stage Three tax cuts, which will cost a staggering $15bn a year and benefit high-income Australians, will be spared.
Albanese said Labor will go ahead with implementing already legislated income tax cuts in 2024, which will create a flat rate of 30 per cent for those earning between $45,000 and $200,000.
Australians earning more than $120,000 and now paying 37 percent tax stand to benefit the most, with workers earning $90,000 a year saving $1,125 and those earning $200,000 earning more than $9,000.
Speaking in 7.30 On ABC Thursday, Albanese confirmed that another federal budget will be delivered on October 25, 2022, just months after the Scott Morrison administration delivered a budget in March.
Albanese also warned about some tough decisions in the October budget.
“We’re going to have to really rein in some of the spending that’s there,” he said. “There are a variety of things we’d like to do that we won’t be able to do in our first budget.
“We’ll also go through line by line, looking at the waste that’s there, and we’ve already identified a number of measures that the previous government took that frankly don’t add up.”
He said election commitments such as cheaper childcare, the creation of Jobs and Skills Australia and climate change would be honored, as would tax cuts for high earners.
Professor Ben Phillips, an expert on welfare and cost of living at the Australian National University, said the cost of tax cuts dwarfs the cost of Labour’s key promises and benefits a group of Australians who already love them. it is going well.
“These cuts kill everything else in terms of costs, so that’s where the biggest problem is going to come in terms of balancing the books,” he said. “Instead, they could provide more assistance to low-income areas, such as JobSeeker recipients; That is where aid should be focused because people with middle and upper incomes are doing well.”
Unemployed Australians receiving Centrelink payments won’t get extra money after Labor abandoned plans to revise the JobSeeker rate. A single person currently earns $642.70 per fortnight or $46 per day.
However, Albanese defended the tax cuts for the wealthy, saying they had already been legislated.
“They are legislated, and one of the things that people have a right to believe is that when a politician makes a commitment before an election, he stands by it, and I intend to do so,” Albanese said.
“What we also need is certainty. People have made assessments based on the certainty that comes through legislated tax changes, and we intend to abide by that.”
Millions benefit from the increase in the minimum wage
However, millions of low-income Australians will benefit from an increase in the minimum wage.
Some 2.7 million minimum-wage and low-wage workers in adjudications are receiving a wage increase of up to 5.2 percent, the most generous in 16 years.
Beginning July 1, the lowest paid will receive $812.60 per week, an increase of $40, and $21.38 per hour, an increase of $1.05.
Labor will also honor the abolition of the Low and Middle Income Tax Offset.
People with incomes up to $126,000 have received the low- and middle-income tax offset worth up to $1,080 per year each financial year since 2018-19.
The offset was due to end when the stage two tax cuts came into play, but was extended for two more years after the cuts were brought forward to 2020 due to the pandemic.
The end of the refund means Australians earning up to $126,000 will pay up to $1,500 more in income tax in 2023 than they do this year.