Tax cuts are on the way, but men set to be the big winners

happy retired couple standing in garden

Planned tax cuts will leave women behind, the CEO of the Australian Council of Social Services (ACOSS), Dr Cassandra Goldie, has warned.

The stage three tax cuts, set to take effect in 2024-25, will revamp the tax brackets, removing one and realigning the cut-off points of others.

But ACOSS and prominent thinktank The Australia Institute have warned that the changes will deliver the greatest benefits to those who need them least – high income earners who are, overwhelmingly, men.

What are the stage three tax cuts?

In the 2018 Federal Budget, the government, led by then Prime Minister Malcolm Turnbull, announced a seven-year personal income tax plan that would be implemented in three stages. The first two stages involved changes to Low and Middle Income Tax Offsets and a raising of the thresholds in the 19 per cent, 32.5 per cent and 37 per cent tax brackets.

Read: Tax relief could be taken away from millions of Aussies

The third and final stage, to be introduced in 2024, will see the 32.5 per cent tax rate change to 30 per cent, the upper threshold for that tax bracket raised from $120,000 to $200,000, the complete removal of the 37 per cent tax bracket and raising the 45 per cent lower threshold from $180,000 to $200,000

For someone with an annual income of more than $120,000, this means that every dollar earned above that amount (and under $200,000) will be taxed at 30 cents in the dollar rather than the current 37 cents.

Who will be the winners and losers as a result of this change?

According to The Australia Institute, men. The institute has published the results of its analysis of the new tax structure and found that it will disproportionately advantage men over women, by a factor as high as two to one.

Australia Institute senior economist Matt Grudnoff said: “Our research shows that the idea young women have the most to gain from the legislated tax cuts is a complete furphy. For every $1 of the tax cut benefit which goes to women, $2 goes to men.”

Read: Concessions help wealthiest Australians avoid tax with super

Mr Grudnoff was referring to the federal government’s attempt to highlight how much young women have to gain.

The office of federal Treasurer Josh Frydenberg has released “unpublished” Treasury data showing the government’s personal income tax plan had already delivered more than $14.4 billion in tax relief to more than 5.2 million women since the 2018-19 fiscal year to the end of 2021. It stated that: “On average each Australian woman was $3130 better off as a result of our tax cuts, with younger women the greater beneficiaries. Those under 24 had seen the amount of tax paid decline by more than 20 per cent, the largest proportion of any cohort.”

Dr Cassandra Goldie, ACOSS CEO, criticised the use of percentage to illustrate this point, claiming that they give “the impression that women and young people gain a lot more from tax cuts than they actually do”.

“People on lower incomes don’t pay much income tax because their wages are already so low,” Dr Goldie said.

Read: Taxpayers footing the bill for government advertising

Mr Grudnoff also criticised the statement issued by the Treasurer’s office. “To cherry pick data and claim that women are better off than men is disingenuous at best. We encourage the government to publicly release the data informing their gender claim so the public can analyse its veracity,” he said.

“The largest part of the tax cut, worth $184 billion, will overwhelmingly benefit older, high-income men. Our research shows that the idea young women have the most to gain from the legislated tax cuts is a complete furphy.”

Mr Grudnoff said the stage three tax cuts would further entrench wealth inequality between men and women.

Where does the Labor Party stand on the issue?

When the tax reforms were introduced in 2019, the Labor Party voted in favour of the entire plan, but not everyone in the party was happy. After a party room meeting in July last year, shadow treasurer Jim Chalmers declared that Labor would stick with the cuts, despite Mr Chalmers himself having previously stated that the stage three changes were the “least affordable, least fair and least likely to be effective because higher-income earners aren’t as likely to spend in the economy as workers of more modest means”.

The Australia Institute has urged the Labor Party to reconsider. “The good news,” said Mr Grudnoff, “is that they [stage three tax cuts] do not come into effect until July 2024, which is plenty of time for the government and the parliament to abandon them.”

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Written by Andrew Gigacz

Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.

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