The federal budget has left untouched tax cuts that would allow certain Australians to take home over $9000 more in their pay each year, despite calls for amendments or abolition of the measure. These tax cuts, known as stage three tax cuts, are the final phase of the former coalition government’s plan to reform the country’s taxation system. They would benefit all Australian workers earning between $18,000 and $200,000 to some extent. However, critics argue that these cuts disproportionately favor wealthy Australians. The Labor party, which promised not to change the legislated cuts, went into the last federal election with this stance. Despite the inflation and rising interest rates, the costly measure has remained unchanged in the budget. The government has acknowledged that the cuts would cost over a quarter of a trillion dollars in the next 10 years. They are currently scheduled to take effect in the 2024-25 financial year. The tax rates and thresholds for each income bracket have been explained. Under stage three, the 37 percent tax rate would be eliminated, the 32.5 percent rate would be lowered to 30 percent, and the threshold for the 45 percent rate would be raised by $20,000, resulting in the same tax rate for anyone earning between $45,001 and $200,000. However, critics claim that these cuts primarily benefit high-income earners and disadvantage low-income earners, particularly younger generations. The Australia Institute, a progressive think tank, has found that more than half of the benefit of these cuts goes to the top 10 percent of income earners, while those earning less than $45,000 per year receive no benefit. The think tank’s research also shows that the cuts favor metropolitan areas over rural electorates. Despite calls from welfare advocacy groups to redirect the money to other areas, such as raising the rate of welfare payments, the Business Council of Australia supports keeping the stage three tax cuts, arguing that they simplify the tax system and remove disincentives for workforce participation.
May Budget Leaves Stage Three Tax Cuts Untouched, Ignoring Calls by Advocates to Revise Flawed Scheme
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