Yahoo Finance Budget 2022: Major tax cuts could be scrapped
Legislated tax cuts, which were brought in by the previous Morrison government, may be scrapped in the upcoming Federal Budget.
Federal Treasurer Jim Chalmers has made no secret of the fact that the October 25 Budget will look very different from the ‘cash splash’ that we saw in March.
Aussies are struggling with the rising cost of living, housing affordability and higher interest rates, while the new Government inherited $1 trillion in debt.
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This has led many to wonder whether the previously promised tax cuts will still go ahead.
Here’s what you need to know about the Stage-three tax cuts and how we got here.
What are the Stage-three tax cuts?
The Stage-three tax cuts will flatten the tax rate for people earning between $45,000 and $200,000 to 30 per cent.
This means everyone who earns between those amounts will all be taxed at the same rate and the existing tax bracket for those earning between $120,000 to $180,000 will be removed.
The top tax threshold will also be lifted to over $200,000.
Currently, these tax cuts are set to occur in July 2024.
Why might the tax cuts be axed?
The Aussie economy is not in the best position. Certainly, things aren't as bad as they are in some other countries following COVID shutdowns, but people are struggling.
Not only that but the Albanese Government really needs to reduce Government debt, which is tipped to be around $1 trillion.
The Government makes a lot of money from taxes, so reducing the amount people are taxed means the Government won’t get as much money to fund all the things it does.
People have also argued against the tax cuts because they primarily benefit high income earners.
At a time when so many everyday Australians are struggling with the higher cost of living, it has been argued those with the most money are not the ones the Government should be focused on helping right now.
However, not everyone agrees.
Independent economist Chris Richardson said the impact of the Stage-three tax cuts on fairness is overblown.
Richardson said the tax changes would make little difference to the proportions of tax paid by higher income earners.
"Although Stage-three does benefit the top 10 per cent, it actually delivers tax cuts to the top 78 per cent of taxpayers," he wrote on Twitter.
- With AAP
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