The Parliamentary Budget Office (PBO) released its 2017-18 Budget: medium-term projections report, which reveals how the Coalition plans to get the nation’s economy back into surplus.
The report shows that the Coalition has shifted the nation’s tax burden away from businesses and onto the individual.
The Government’s projected return to surplus relies on huge increases in personal income tax to make up for lost revenue incurred by the income lost as a result of the Coalition’s $65.4 billion company tax cuts announced in the May 2017 Budget.
The PBO predicts that the average personal income tax rate will rise from 22.7 per cent in 2016-17 to 25.9 per cent in 10 years’ time.
Whereas company tax receipts will increase from 3.9 per cent of the GDP in 2016-17 to just 4.2 per cent in 2027-28.
The PBO also projects that the rise in income tax is reliant on significant wages growth over the next 10 years, which will drive workers into higher tax brackets. The report makes this claim just five days since the phasing in of penalty rate cuts which began on 1 July, as well as a two per cent pay rise to politicians and the abolition of the temporary budget repair levy, which is equivalent to a two per cent tax cut for the wealthy.
The return to surplus will also be funded by the planned 0.5 per cent increase to the Medicare levy to be paid by all Australians.
Because of the Budget change that increases the rate at which the pension is reduced in the asset test threshold, the cost of the Age Pension is expected to remain stagnant – despite our ageing population.
Are you surprised that the Coalition has shifted the nation’s tax burden away from businesses and onto the individual? Is this something with which you agree? Is this shift, along with making the individual fund the NDIS and Medicare a sign of a lazy government? Or is it a sign of the times?