The Liberal Party has put forward its tax roadmap, and it includes a reduction in the middle tax bracket from 32.5 per cent to 30 per cent in the 2024-25 financial year.
The 37 per cent tax bracket will be removed, meaning 94 per cent of people will have a marginal tax rate of 30 per cent or less by 2025.
This is on top of tax cuts for low and middle-income earners of up to $1,080 for single earners or up to $2,160 for dual income families. These changes were slated for this financial year, but are currently facing delays.
What the analysts are saying
New research from The Australia Institute shows that 50 per cent of the benefit is going to the top 20 per cent of taxpayers, while the bottom half only gets 12 percent benefit and the bottom 20 per cent receive 0.2 per cent.
Executive director of the Australia Institute Ben Oquist believes that economically there is little benefit to cutting high income tax.
“This research shows that the overwhelming proportion of these new stage 3 tax cuts will flow to higher-income earners. There is little evidence to suggest such tax cuts are needed on economic or equity grounds,” said Mr Oquist.
“There is, however, some economic rationale for more immediate tax cuts for low and middle-income earners that could stimulate the economy at a time of sluggish economic growth,” said Mr Oquist.
The Australia Institute goes further to say that the new tax system will help Australians in the way it has been promised.
“The progressive nature of Australia’s income tax system has been a cornerstone of the Australian tax system for decades. These tax cuts weaken that progressive architecture,” said Mr Oquist.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.