Yes, we’re still on this debate.
And we’re going to stay on it until the seven-year tax plan is passed.
Only then will we see the immense growth in the Australian economy that we’ve all been hoping for.
That’s the whole idea of the government’s new tax plan: to inspire Australians to reach for those top-dollar incomes.
Clearly, Labor doesn’t see it that way. They’re only on board with the first round of the plan, involving tax returns for low- and mid-income earners — with up to $200 and $530 in returns respectively, from July 2019.
Labor likes this part, because it will help with living costs and increase lower wages.
It’s the rest of the government’s plan where they take offence.
They’re particularly against the final section of the plan — which would not take place until July 2024 —placing anyone earning between $41,000–200,000 a year on the same tax rate.
They aren’t lovers of equality. Especially when it comes to higher earners.
As such, they have promised that a Labor government will pass tax offsets of up to $928 on anyone earning $125,000 or less.
This, along with other alternative ideas, will lead to what Labor’s Treasury spokesman Chris Bowen claims:
‘70 per cent of Australian workers better off under Labor’s plan. So hence, accordingly, our plan is fairer and more responsible and we will be opposing stage two of the government’s tax cuts.’
Indeed, putting them side by side, from 2024–2025, the Labor and the Coalition’s tax policies can be split at the $95,000 income mark — where anyone earning less than that benefits under Labor, and those earning more are in a better position under the Coalition.
Bowen equated the ‘$95,000 or less’ to 70% of Australia, though that didn’t account for inflation.
The real story here…
In that case, $95,000 in 2025 is equal to today’s $75,000 — less than the average full-time wage.
So Scott Morrison is not wrong in telling The Australian:
‘Labor’s plan for low- to middle-income earners is to ensure they stay on low- to middle-incomes.’
And their plan would also deny $41 billion worth of tax cuts to low- and mid-income earners — yes, the ones they are supposedly ‘looking out for’ — by upping the 19% marginal tax rate threshold to $40,000 in 2022.
And there’d be $36 billion in potential cuts taken from the next tier by raising that threshold from $90,000 to $120,000.
Most annoying is that it will inhibit $42 billion in tax relief from 2024–25 by flattening the marginal tax rates at 32.5% between $41,000-$200,000.
Not to mention it adds a further $70 billion to Labor’s election war fund.
And a war it will be, because Labor demands a splitting of the plan.
So the next election rests on where each voter sits in relation to the tax brackets…interesting.
But it’s also frustrating, because the Coalition’s plan rests on a solid argument.
If we don’t change the tax rates for our major-earning businesses, they are going to lose hope in Australia’s ability to grow their profit margins. Driving many job-creating companies overseas.
We all know that you win some, you lose some. But why must it be that if you win more, you’ll also lose more?
If that’s the case, trying just isn’t worth it. You want to keep the money you work hard to earn, or there’s no point working hard at all.
As our Prime Minister Malcolm Turnbull confirmed to parliament:
‘We know they are encouraged by the stronger economy to get ahead, and we will constantly remind them that the greatest threat to that stronger economy is the modern Labor Party, with its denial of aspiration — the denials of self-advancement that workers for generations used to deliver through the efforts of Labor representatives.’
Why can’t the winners keep their rewards?
Imogen van der Meer
PS: Tired of seeing your wages, investments and interest gains all sapped by tax? Had enough of job-creating companies being driven overseas by Australia’s heavy tax burden? Then you should read our free new research report, ‘What you could do to stop Australia’s Tax Freedom Day from blowing out even further in 2018’. You can download that free report here.