How tax cuts will affect you

While many workers around the nation will benefit from the passing of the Government’s $140 billion income tax package, older Australians will lose out in the long run, says the Australian Council of Social Services (ACOSS).

The short-term gains for working Australians will be minor, though well received. But, as ACOSS Chief Executive Cassandra Goldie warns, with the passing of these tax cuts occurring while the budget remains weak, people will lose access to essential services in the long term

“The tax cut package is gambling the future of our medical services, aged care services, disability services, and social security payments most of us rely upon at some stage in our lives,” said Dr Goldie.

“Essential services will lose funding because tax cuts have to be paid for. When that happens, every person in Australia loses. We will all have to pay for services that in Australia, have been universally available to us all.

“[The tax package] will carve out a gulf between the haves and have-nots in Australia”: Dr Cassandra Goldie 

Senior economist at The Australia Institute, Matt Grudnoff, agrees.

“The overwhelming majority of retirees pay no tax and therefore will receive no benefit from such an income tax cut,” Mr Grudnoff told YourLifeChoices.

“They may, however, be very concerned that a tax cut reduces the amount of money that governments can spend on health services and the Age Pension – things that retirees depend on.”

Dr Goldie is concerned that the Coalition is looking for political points at a time when the economy, and the country, can least afford it.

“It will be a low point in Australian politics, where our politicians will have demonstrated a lack of care, responsibility and planning for the future,” she said.

“The biggest winners in the tax cut package are high-income earners. Middle income earners get little beyond the first stage. Low income earners don’t figure at all.

“The package is a short-term gain only, with high income earners winning in the long term.

“Promising huge tax cuts six years in advance is foolhardy. Are we fortune tellers? No, and none of us know what will happen to the economy and the budget that far ahead.”

There have been rumblings from independent analysts, Labor and the Greens that the tax cuts will do little, if anything, to help our economy, with suggestions that the Government should look at cutting down on other concessions, such as negative gearing and capital gains tax discounts.

That way, working families could still benefit without sacrificing funding for essential services and risking a budget staying in the red for much longer.

“We got into trouble last time a full income tax package was passed in advance. The GFC meant our Budget was in the red for a very long time and our essential services suffered as a result,” said Dr Goldie.

“[The tax package] will carve out a gulf between the haves and have-nots in Australia, between the minority of people who benefit and the majority who lose benefits and essential services.”

Are you a fan of the Government’s tax package? What do you think could have been done instead? Do you worry that you will either have to pay more for, or miss out entirely on, essential services?

Related articles:
Our tax cuts are bigger than yours
Tax cuts will hurt the Age Pension
Coalition trading tax cuts for votes

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