Yahoo Finance Coalition’s income tax cuts would make gender pay inequality worse
It looks almost certain that Prime Minister Scott Morrison will fail to deliver his tax cut plan, arguably the biggest pillar of the federal budget announced in early April, to Aussies by the deadline of 1 July.
Now, it appears that the tax cuts won’t just be delayed, but they’ll also be unfairly weighted towards men and high-income earners, particularly in the latter stages of the plan.
Initially, women and men will get roughly the same benefit of the tax cuts (47 per cent and 53 per cent respectively) in 2018-2019, or ‘stage 1’, according to thinktank The Australia Institute.
But this will change in the latter years as the tax cut plan is rolled out.
“As the tax cuts progress through the three stages, women get a smaller and smaller share,” Australia Institute senior economist Matt Grudnoff said.
“This is because the tax cuts increasingly flow to high income earners and men are much more likely to earn higher incomes than women,” he explained.
Benefits of 2024-25 tax cuts, or ‘stage 3’, will flow primarily to the top 10 per cent of the highest earners in the country, with more than half going to the top 20 per cent, former analysis from the Australia Institute shows.
“The bottom 10 per cent got none of the benefit and the bottom 20 per cent got 0.2 per cent,” Grudnoff wrote in his report.
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What’s this got to do with men and women?
Put most straightforwardly, men tend to be on higher incomes than women.
At the top percentile of earners, the gap between how much men and women earn on average is gaping.
“What this means is that income tax cuts that favour high income earners, like stage 3, also favour males.”
In stage 3 of the plan, $11 billion will go to men, but only $6 billion will go to women, meaning men will get nearly twice as much as the fairer sex.
“The final stage of the tax cuts due to come into effect in 2024-25 will see men get two dollars in tax cuts for every dollar women get.”
Grudnoff pointed out that men will get the most benefits from the tax cuts, while women will have the most to lose.
“This cycle of tax cuts and spending cuts further entrenches income inequality between men and women,” he said.
“If the current round of income tax cuts occurs, they may provoke another round of budget cuts in future years. It is likely that women will again be most disadvantaged by this process.
“Whether deliberate or not, this cycle of tax cut and spending cut is making gender inequality worse.”
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On top of that, it won’t do much to boost the economy either, the senior economist added.
“With the slowing economy, the government needs to be clever with its fiscal stimulus.
“The tax cuts to high income earners in 2024-25 are not well targeted and are too far off to help the economy right now.”
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