Federal Budget 2019: The tax offset that doubled early

Government’s ‘immediate relief for taxpayers’ cops a whack.

The tax offset that doubled before it even came into effect

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?

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    COMMENTS

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    TREBOR
    3rd Apr 2019
    11:03am
    This... errrrr... infrastructure spending... exactly what is it going to? More 'private roads', more railways to nowhere to suit a single rip-out operation, long overdue public road fixes, oh, and there's alternative electricity energy sources that they rush for while publicly denouncing them, plots and plans for nuclear and coal stations - all those studies need funding to the max....

    I'd like, for once since the Snowy Scheme, see some solid result from all this multi-billion dollar 'infrastructure' spending.
    Karl Marx
    3rd Apr 2019
    11:05am
    nothing for SFR, those on an OAP, welfare or very low income earners. LNPI believe have abandoned ship. ead ducks in the water
    TREBOR
    3rd Apr 2019
    11:08am
    Hmm - another tax cut when the nation is on its knees due to failure to capture revenue as it leaves our shores by the ship-load. A little more of the ready for the lower paid to spend (wow - after years of pirating their income level and contributing to a downturn in retail sales, then blaming online buying), but as usual, too little too late.

    'tax cut' - sounds a lot like the good old Howard installation of a lower revenue fund for an incoming Labor government after his lot sold off the farm and pirated $130Bn to the Bahamas for their Future Fund for themselves and a few others.

    As for retirees - they will suffer the downfall of the shares market that is inevitable some time, and, of course, retirement packaging for pensioners etc will not be held Offshore in a tax haven.... Pirates of The Caribbean.

    Surplus budget? Don't make me laugh.
    TREBOR
    3rd Apr 2019
    11:13am
    I have no built-in objection to tax cuts at the lower end and for relief for small business that pays its way (excluding tradies etc - we all know about that one) - what I object to is this is squid's ink to cover tax cuts at the top - in the name of 'fair and equal treatment'.... can't give the peons a cut without giving the Dons a cut as well.... and to cover tax cuts to corporations that don't pay 30% anyway, and that on taxable income (average 12% on TAXABLE income)....
    GeorgeM
    3rd Apr 2019
    8:09pm
    Nothing to object to a tax cut if it was fair. Also, now that they have admitted there was / is no Budget Emergency, they should have reversed back the nasty Asset Test changes of Jan 2017 - otherwise, the Part-pensioners are paying for these tax cuts.

    I note Matt Grudnoff is focusing on the lower end who miss out on the tax cuts - just taking a leaf out of Labor's response as Bowen promptly promised to fix that and back all cuts!

    Important point to note regarding fairness of the tax cuts - as you get to 2024, "Someone on $200,000 would receive a whopping $11,640."
    See link from News (even they admit it) below:
    https://www.news.com.au/finance/economy/federal-budget/income-tax-cuts-announced-in-budget-what-youll-get/news-story/2ae5d206b6a4b2ed314cad080d0bc59e

    The above includes ALL Politicians - that's why they all voted for the 2024 changes (initial vote was for $7,000 earlier, now that's increased to $11,640)! Liberals, Nationals, Labor, Greens, presumably most others as well, in both houses are all happy to approve it - not a word from Labor now that they will block it!
    MICK
    3rd Apr 2019
    11:46am
    "Immediate tax relief"? So why has this happened 5 weeks before an election and not in the past 6 years?
    I know a scam when I see one. This is a con to buy votes and this demonstrates how decrepit this low life government is. RIP!
    Nerk
    3rd Apr 2019
    11:54am
    They wouldn't do that before a election, it's just a coincidence
    MICK
    3rd Apr 2019
    12:48pm
    Just like they wouldn't smear a Labour candidate just before an election? Think Shorten, Foley and Daley.
    KSS
    3rd Apr 2019
    1:19pm
    Just like Mr Shorten would never rip off the workers he was paid to represent as a Union Official, or lie like Mr Shorten did at the last election over Mediscare (and by all accounts will do again this time round). Or.... Or..... Or.....

    Mr Foley smeared himself with inappropriate behaviour and Mr Daly didn't know his policies and couldn't take the electorate beyond his ridiculous obsession with sporting stadia. Not to mention his stupidity in insulting a major cohort of his constituency in abusing the Chinese vote! Mr Foley and Mr Daly didn't need help in the smear stakes, they were superb all by themselves.
    MICK
    3rd Apr 2019
    10:41pm
    Have a look at the side you are plugging for KSS. Not a bunch of boy scouts.
    Heard the leader of the pack on 7:30 Report tonight. Apart from trying to not let the reporter bring him back on track Morrison appeared to threaten Sales at the end of the interview. A real piece of work.

    Your last bit defies logic. Daley made a simple mistake. One which Morrison's team make regularly. Think the Budget and less than 12 hours later having to include Newstart folk for a handout.
    Daley had a perfectly valid reason to object to wasting a huge amount of PUBLIC money on a perfectly good stadium which the third world would give their right arm to have.
    The issue you have is one of fairness, the same as all LNP MPs. They ALWAYS smear. Wait for the next one to roll over Shorten or one of his senior ministry. Will be shocked if that does not happen and Murdoch media is already at it.....

    You are a rusted on disgrace for a human being KSS. Its not your political persuasion I object to but rather your dishonest 'one side can do as it likes and the other must play by the rules' hypocrisy. You are a true Liberal in all senses of the word.
    Zach
    3rd Apr 2019
    12:16pm
    This is the same image of the Howard Costello final budget. Spend the huge windfall of mining royalties of $344 billion and leave the treasury vastly depleted. Then if they get in again they will start the game of robbing Peter to pay Paul and then robbing Paul to pay back Peter, or leave the incoming Government precious little to work with. Bloody disgusting tactics all in the name of power.
    KSS
    3rd Apr 2019
    1:22pm
    Except the Howard/Costello government left the coffers full. It was Rudd/Gillard/Rudd governments that ran it down, gave free cookies for all - even the dead - and then made expensive unfunded promises that the incoming government was left to deal with and no cookies left in the jar!
    devuman
    3rd Apr 2019
    2:57pm
    KSS - don't confuse the issue with facts. Zach, Trebor and Mick beleive in the superiority of any Labour Government - anything that challenges this belief is blasphemous heresy.
    TREBOR
    3rd Apr 2019
    8:22pm
    Nonsense, devuman - I believe in the superirity of NO party in government.... I merely address issues as I see them.

    Get a grip on yourself, man - people are watching.
    TREBOR
    3rd Apr 2019
    8:28pm
    Howard/Costello sold off the farm and left underlying reduction in revenue, and lifted $130Bn from the gold rush to salt away in the Bahamas for their own and their mate' perpetual incomes while paying no tax.

    I wouldn't laud that pair of thieves.
    Sundays
    3rd Apr 2019
    3:12pm
    This Budget is dependent in the Liberals winning the election. Until that happens, any promises are meaningless
    Paddington
    3rd Apr 2019
    5:09pm
    Yes, people are worried about the environment and the LNP will never be able to step up because of the likes of Abbott and other sceptics. I think that LNP mob are very desperate because polls show Labor winning.
    Paul
    3rd Apr 2019
    5:27pm
    Why would any retiree complain about tax cuts for middle and higher income earners? Who do you think pays for your pensions, health care, tax-free superannuation income and aged care? It's the people who are still working and paying taxes, many of whom can't afford to buy a house, which was a lot easier when I was younger.

    As for tax avoidance by multinationals and wealthy families, the budget includes new measures, on top of those implemented in 2016, to crack down on them further. What else do you want the governmnet to do? Send in the SAS?

    As a 1940's Aussie baby boomer, who has had the benefit of living in this great country with lots of opportunity, I think that some people of my generation are too focussed on what's in it for them, rather than giving back to the country and its younger generations.
    GeorgeM
    3rd Apr 2019
    8:24pm
    Whose complaining about tax cuts if only they were fair? People at the lowest level get $0, people in the middle get $1,000 or so, and those at the top (once you get to 2024) get a whopping $11,640!!!! Is that fair??? If you doubt the facts, see the link below:
    Quote "Someone on $200,000 would receive a whopping $11,640." from News.com.au:
    https://www.news.com.au/finance/economy/federal-budget/income-tax-cuts-announced-in-budget-what-youll-get/news-story/2ae5d206b6a4b2ed314cad080d0bc59e

    Tax avoidance not there? See link below about Millionaires paying Zero tax:
    https://www.abc.net.au/news/2019-03-30/sixty-nine-millionaires-paid-zero-tax-in-2016-17/10954888

    What should the Govt do? Simple really - impose Minimum Tax (say 30% on Individuals and Trusts without allowing any Income shifting) without allowing any Deductions. Also, say 25% on Gross Revenue in Australia (without allowing Income Shifting) for Large Companies after allowing only Deductions for Local proven expenses, and not allowing any overseas labour, capital or interest expenses (a large proportion of which are fraudulent through fake companies).

    Besides the massive Tax Intake increases, a Minimum Tax system will also help local companies (especially small & medium ones) to face competition from these overseas companies better.
    TREBOR
    3rd Apr 2019
    8:31pm
    Don't be ridiculous, Paul - the fat cats don;t pay for pensions and such...unless they are on salary pure they pay little to no income tax ... income tax is not the be-all and end-all of taxation, and the return on investment over 70+ years from the social security contribution from income tax and other levies from other tax should be astronomical, if it had been preserved and not rolled over into consolidated revenue and then wasted.

    Unfortunately it was pissed against the wall to create inflationary pressures by stupid governments.
    Paul
    3rd Apr 2019
    5:27pm
    Why would any retiree complain about tax cuts for middle and higher income earners? Who do you think pays for your pensions, health care, tax-free superannuation income and aged care? It's the people who are still working and paying taxes, many of whom can't afford to buy a house, which was a lot easier when I was younger.

    As for tax avoidance by multinationals and wealthy families, the budget includes new measures, on top of those implemented in 2016, to crack down on them further. What else do you want the governmnet to do? Send in the SAS?

    As a 1940's Aussie baby boomer, who has had the benefit of living in this great country with lots of opportunity, I think that some people of my generation are too focussed on what's in it for them, rather than giving back to the country and its younger generations.
    TREBOR
    3rd Apr 2019
    8:32pm
    **sighs* We've already given, Paul.... look at what they enjoy today that we never had.. and they still complain endlessly.
    Paul
    3rd Apr 2019
    8:59pm
    To GeorgeM and Trebor: A couple of simple points. Yes, people on higher incomes will get a bigger tax cut; but they pay most of the tax to begin with. 46% of the Commonwealth's revenue comes from individuals' income tax, and most of that is paid by the top earners. So, when there's a tax cut, simple arithmetic tells that most of it wil go to the ones who pay the most tax. What's wrong with that?

    Regarding "look at what they enjoy today", what exactly is that? Most of the young people I know, work just as hard as we did, and have to pay off much bigger mortgages that we had.
    TREBOR
    4th Apr 2019
    12:07am
    They can afford it. If you set their incomes in proportion and levied a single rate of tax so that they still ended up with the same after-tax income - NONE of them would go for it.

    It's a matter of personal pride to be able to point out that they make such a big dollar... and be very careful to differentiate between the high salary earners and those who apparently spend all their income on their business.... and get nothing for themselves (LMAO).

    Even high salary earners have the opportunity to place much of their income in tax-beneficial areas.... the ordinary must do with what they've got.. and after deductions, the small guy pays a massively proportionally higher actual tax than the big guy.

    The little guy has next to no deductions.... yet is a business - in the business of making money, same as a business person.

    Maybe we should simply incorporate all individuals and everyone play by the same rules.....
    Paul
    3rd Apr 2019
    8:59pm
    To GeorgeM and Trebor: A couple of simple points. Yes, people on higher incomes will get a bigger tax cut; but they pay most of the tax to begin with. 46% of the Commonwealth's revenue comes from individuals' income tax, and most of that is paid by the top earners. So, when there's a tax cut, simple arithmetic tells that most of it wil go to the ones who pay the most tax. What's wrong with that?

    Regarding "look at what they enjoy today", what exactly is that? Most of the young people I know, work just as hard as we did, and have to pay off much bigger mortgages that we had.
    TREBOR
    4th Apr 2019
    12:08am
    Would you prefer that everyone receive the same level of income so as to ensure the poor darlings with all the cream don't suffer too much?


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