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The tax cuts and cash boosters in the works for Australians
The effectiveness of the Morrison government’s income tax cuts has been called into question, but one tax expert has outlined some of the benefits for millions of Australians.
The tax cuts and cash boosters in the works for Australians
The effectiveness of the Morrison government’s income tax cuts has been called into question, but one tax expert has outlined some of the benefits for millions of Australians.
Speaking with nestegg, senior tax counsel with The Tax Institute, Bob Deutsch, believes the flatter tax brackets will be encouraging for Australian taxpayers.
“I fully endorse anything that is simplified as long as it’s not unfair. The Stage 3 changes, I think, are a very important simplification,” he said.
“The long bracket from $45,000 to $200,000, I think it very much addresses the aspiration desires of Australians,” said Mr Deutsch.
“Millions of Australians will be sitting in that bracket from $50,000 to $150,000. For them, any future pay increase once Stage 3 is in place will not push them into a higher bracket for a long time. I think that is really the key benefit to all of this,” continued Mr Deutsch.
Are the changes fair?
The argument against the Stage 3 tax cuts has been around someone on $46,000 will have to pay the same tax as someone who is making $199,000.
However, Mr Deutsch believes this is simply untrue.
“It’s true they are paying the same marginal rate on the next dollar,” he said.
“Overall, when you add up what happens taking into account all the brackets, the person on $190,000 will be paying significantly more tax,” said Mr Deutsch.
Is this system future-proofed?
The tax profession has long been calling for genuine tax reform to deal with the complexities of the Tax Act and the inefficiencies of some heftier taxes, like stamp duty on property purchases.
Though these changes from the Morrison government don’t necessarily constitute tax reform, they represent some of the tweaks the tax profession has been calling for.
“The system is still progressive even under Stage 3. If you look at the total tax paid at each level of $10,000. It is progressive in the sense that the overall tax rate increases as you go higher and higher.”
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