in

Anthony Albanese’s phase 3 tax relief changes winners and losers revealed: How much of YOUR money you want to keep – as Labor approves controversial plan

Labour’s impromptu meeting on the cost of living ended with unanimous support for a change to the third stage of tax cuts.

Details of Prime Minister Anthony Albanese’s proposal leaked throughout the day, with low- and middle-income earners getting a much bigger boost at the expense of the uptown.

He held a committee meeting with Labor MPs in Canberra at 4pm to discuss the changes.

By 5.30pm it was all over the place as MPs slowly began to trickle out of the room, coy about the specific details Mr Albanese promised tomorrow, during his speech at the National Press Club.

Despite fears of «breaking an election promise» to keep the tax cuts in full, everyone in the room reportedly eventually backed the call, lured by the temptation to help struggling Central Australia through the cost of living crisis.

It is understood Labor will cut the tax rate for people earning between $19,000 and $45,000, from 19 per cent to 16 per cent.

Earlier Cabinet leaks revealed that key parts of the third stage of tax cuts, which are most beneficial to high earners above $180,000, will be scrapped.

The former coalition government drafted the legislation ahead of the Covid pandemic and the current cost of living crisis and was due to come into force on 1

The original plan included no tax breaks at all for those making less than $45,000 and only an extra $375 a year for those making $60,000.

High earners who bring in more than $180,000 a year were in line for a $9,075 tax cut – but that was almost halved in the Prime Minister’s reshuffle.

Part-time workers and people on very low incomes are now expected to be able to earn up to $19,000 a year tax-free under the new proposals, up from $18,200.

That alone is worth up to $152 a year for those on $19,000 a year.

Those earning between $19,001 and $45,000 are expected to be taxed just 16c on the dollar, up from the current 19c. That will give those on $45,000 a year an extra $932 a year.

The marginal tax rate of 32.5c is to be cut to 30c and the tax bracket for middle-income workers is also increasing from $120,000 to $135,000, according to Cabinet leaks.

Those on $120,000 a year will now be $2,807 a year better off, while those on $135,000 will benefit by a total of $3,857 a year.

The previous phase three tax plans were set to completely scrap the 37c tax rate for middle to high earners, but the new plans will now keep this but adjust the tax bands.

Under the new proposal, earnings between $135,001 and above $190,000 (up from $180,000) will be achieved at 37 cv for every dollar.

Those making up to $180,000 will also be $3,857 a year better off than they are now, while those making $190,000 or more will pay $4,657 a year less in taxes than they do now.

This means that the tax bonus for the highest income countries was almost halved compared to the previous phase three proposals.

Recommended Article
Jessica Mauboy doesn't look like this anymore! The pop star stunned fans with a shocking transformation

The new third stage of tax cuts has leaked

Tax exemption threshold increased from $18,200 to $19,000

Low-paid tax bracket reduced from 19c to 16c for earnings between $19,001 and $45,000

Lower middle income tax rate from 32.5c to 30c on earnings between $45,001 and $135,000

The top tax rate now starts at $190,000, up from $180,000

PHASE THREE TAX CUT: What Aussies got BEFORE the overhaul

$18,200 or less: Nothing

$45,000: Nothing

60,000 dollars: $375 as the tax burden will drop to $10,692 from $11,067

80,000 dollars: $875 as the tax burden will drop to $17,192 from $18,067

$120,000: $1,875 as the tax burden drops to $29,992 from $31,867

$150,000: $3,975 as the tax burden drops to $39,592 from $43,567

$200,000: $9,075 as the tax burden drops to $55,592 from $64,667

$250,000: $9,075 as the tax burden drops to $79,092 from $88,167

$300,000: $9,075 as the tax burden drops to $102,592 from $111,667

Source: Federal Ministry of Finance

PHASE THREE TAX CUT: What Aussies will get NOW

$18,200 or less: Nothing

$19,000: $152 if the tax-free limit is increased from $18,200

$45,000: $932 if the tax rate drops from 19c to 16c

$60,000: $1,307 if the median income tax rate drops from 32.5c to 30c

$80,000: $1,807 if the median income tax rate drops from 32.5c to 30c

$120,000: $2,807 if the median income tax rate drops from 32.5c to 30c

$135,000: $3,857 if the 30c tax bracket increases from $120,000 to $135,000

$190,000 or more: $4,657 if the top tax bracket increases from $180,000 to $190,000

Verified by H&R Block

The planned tax cuts were intended to push the top tax bracket to $200,000 before high earners touch 45c in the dollar. But the new system capped that at $190,000.

The move would deliver much larger tax cuts for low- and middle-income earners, while the top earners would still be better off than they are now, but not by as much as they would have been under the original proposal.

But Prime Minister Anthony Albanese’s sudden overhaul doesn’t go far enough, say economists, who say the country’s tax brackets have been stagnant for 16 years and a facelift is long overdue.

POLITICAL FIRE

Prime Minister Anthony Albanese has been caught in a political firestorm this week over a move to scrap the enacted tax cuts he had promised to keep.

He said he kept his word on the tax cuts, insisting «my word is my commitment».

The proposals were enacted by the coalition government when it was still in power, but Labor pledged at the election to still bring them forward as planned on July 1 this year.

But on Tuesday Labor ministers met in Canberra for an emergency meeting to overhaul tax proposals in response to the cost of living crisis.

«This proposal will be all about supporting Central Australia,» the Prime Minister insisted on Wednesday, saying he would reveal more details in a speech at the National Press Club on Thursday.

Recommended Article
Chita Rivera dies at 91: Tony-winning Broadway icon known for roles in West Side Story and Guys and Dolls dies

«We know there are cost of living pressures in Central Australia and we are committed to following the Treasury’s advice and providing assistance.»

The overhaul was welcomed by H&R Block’s chief tax officer Mark Chapman, who said the previous model was unfairly skewed towards high incomes.

«The government’s redesign of the third stage of tax cuts is a welcome recalibration of the original tax cut package introduced by the former Liberal government several years ago,» he told Daily Mail Australia.

“In the current economic climate, it is difficult to justify the heavy weighting of the original package towards the highest earners.

«With the cost of living having a disproportionate impact on these low- and middle-income taxpayers, this will give hard-working families much-needed extra pocket money to pay for mortgages, food and fuel.»

OBSOLETE TAX BANDS

But economists have warned that the current top tax rates are outdated and in dire need of reform.

The highest rate currently applies to those with annual salaries of $180,000 or more, while high earners then receive 45c for every dollar earned above that threshold.

This elite tax bracket has remained the same since it was set in 2008 – and Callam Pickering, chief economist at employment website Indeed, says the figure has failed to keep pace with rising wages.

Prime Minister Anthony Albanese (pictured) has been caught in a political firestorm this week over whether to scrap a planned tax reform that will most benefit the wealthy

Part-time workers making less than $45,000 a year (left) will now get up to $932 in tax cuts under the revised plans, up from nothing under the previous plan, while low-wage earners between $45,000 and $60,000 USD per year (right), their taxes will be reduced by up to USD 1,307, from USD 375

He says that after adjusting for inflation, the top tax bracket in 2024 should actually start at $270,000 to target the same high-income bracket as intended in 2008.

But even the new, leaked, third stage of tax reform – set to take effect on July 1 – only proposes raising it to $190,000, up from $200,000 in the coalition’s plan.

«We should tax incomes much less than we do,» Mr Pickering added in a post for X, advocating for higher taxable income brackets.

«We should tax wealth much more.

«There is no valid reason why the tax-free thresholds and top marginal rate are so low.»

Next year alone, the original planned cuts were to return a total of $11.7 billion to the country’s top 10 per cent, who earn more than $153,000 a year, according to Australia Institute figures. By comparison, the institute says just $4.9 billion would be distributed among the millions who earn less than $113,000 a year – 80 per cent of all Australian workers – under the cuts.

The total cost to government revenue of the planned Stage Three tax cuts would be a staggering $313 billion over the next 10 years.

Recommended Article
Controversial England kit design shows 'a bit of incompetence', claims Joe Cole... while former Three Lions star admits national side 'don't need' controversy

Next year alone, the original planned cuts were to return a total of $11.7 billion to the country’s top 10 per cent, who earn more than $153,000 a year, according to Australia Institute figures.

BUDGET IMPACT

The amount was higher than the entire national annual funding budget for Australian universities, which costs $11.5 billion, and almost as much as the government spends on Australia’s military, at $12.5 billion, the institute said.

By comparison, the institute says just $4.9 billion would be distributed among the millions who earn less than $113,000 a year – 80 per cent of all Australian workers – under the cuts.

Those making less than $45,000 would get nothing at all under the original legislation.

The left-leaning lobby group added: “The tax cuts in Stage 3 (were) massively expensive and massively unfair.

Those earning a median salary between $60,000 and $80,000 a year (left) will see their tax burden drop by up to $1,807, down from $875. The nation’s top earners (right) were $9,075 a year better off under the original tax cuts, but have now been reduced to $4,657

“Australia is in the midst of a cost of living crisis and the Stage 3 tax cuts would (would) deliver zero to those struggling to get by on the minimum wage or low incomes.

«They (would) give bankers, surgeons and MPs an extra $9,075 a year, while (hospitality) workers get nothing.»

He added: “The tax cuts in the third stage were promised under completely different economic conditions.

«We now face a cost-of-living crisis, soaring inflation and a potential recession.»

Treasurer Jim Chalmers is set to present new tax plans in the next federal budget, expected in June, replacing the July 1 legislated introduction of the third phase of tax cuts.

‘BROKEN PROMISES’

Despite pledging he was «a man of his word» when asked in 2022 whether he had committed to cuts in the third phase of the coalition, he later insisted he was only committed to tax cuts.

The Prime Minister told the Kyle and Jackie O show on Tuesday: “I support the tax cuts. Everyone will get a tax cut.

“We generally look at how we can help low- and middle-income people.

“Central Australia in particular is doing it really hard. People have mortgages, so we’re looking for ways to help them.»

However, Shadow Treasurer Angus Taylor described the move to change the third stage of tax cuts as the «mother of all broken promises».

«It’s something the Prime Minister and the Treasurer have committed to over 100 times,» he told Seven’s Sunrise on Tuesday. “It is in the legislation and Labor voted for it.

“It’s been in two elections – that’s not something you would change.

«Frankly, if the Prime Minister decides he wants to change it, he tells us … his word means absolutely nothing.»

«Because there hasn’t been a promise with such great commitment from both sides of politics for a long time, certainly during my time in politics.»

What do you think?

Deja una respuesta

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *

GIPHY App Key not set. Please check settings

Swiggy’s $1 billion IPO could include Prosus as promoter

Lightspeed names Vivek Gambhir and Kevin Aluwi as venture partners for expansion