Tax cuts get people’s attention.
In Federal Budget 2019, Treasurer Josh Frydenberg announced that the Government was more than doubling the maximum relief for low- and middle-income earners “to ease cost-of-living pressures and stimulate the economy”.
“Immediate relief for taxpayers – in 13 weeks’ time,” he said at Tuesday’s late afternoon press conference, which appeared to be hastily aborted after media interrogation of the low and middle income tax offset (LMITO).
The move was described by senior economist at The Australia Institute, Matt Grudnoff, as politically silly.
“No one would receive a cent until July (after the federal election) and now they’re doubling it,” he said.
Mr Grudnoff said there would be no gain for those who earnt less than $30,000.
“It’s a tax for middle-income families. Those earning between $45,000 and about $90,000 would benefit the most.
“As a political move it’s silly.”
So, as a means of “providing immediate relief to ease cost-of-living pressures”, the advantages would appear to have little benefit to older Australians.
But back to Mr Frydenberg and who he thinks the tax cut would actually benefit.
“First, providing immediate relief to address cost of living pressures,” he said. “Second, protecting income earners from bracket creep. Third, abolishing an entire tax bracket, simplifying the system, incentivising and rewarding hard work.”
He said this tax relief would lift household incomes and boost spending at local businesses.
He also announced “long-term structural reform by lowering the 32.5 per cent tax rate to 30 per cent from 1 July 2024.”
“This will cover all taxpayers earning between $45,000 and $200,000 and will mean that 94 per cent of taxpayers will pay no more than 30 cents in the dollar.
“Following these changes, our tax system will remain highly progressive.”
Are you confused? Do you think this Budget all about the upcoming federal election?