A new cost-of-living support plan agreed upon on Wednesday by the Labor government is expected to take more than $4000 in promised tax cuts from wealthy Australians and deliver a $800 bump to those earning less than $140,000.
But will there be a revolt from wealthy Australians losing out on cuts promised to them in 2019? Koch doesn’t think so and told Yahoo Finance it was simply “a fair way to go”. He argued most would realise there needs to be a proportionate response to the cost-of-living crisis and that low or middle income earners need the cash break more.
“People who are earning more would know someone - a friend, relative, niece or nephew - who is doing it really tough,” he said. “And they would know it’s not just the naked dollar that matters, it’s the impact it has on a household, the proportion of income and the difference that makes.”
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“It’s not a matter of them taking the money to go out and have a good time, it’s about having a bit of extra cash to make ends meet.”
He said inflation was still putting a "shocking" burden on most Australian households, but should not worsen under the proposed reforms.
Koch, economic director for Compare the Market, said pay rises weren’t enough to help hard-working Australians as the government was taking far too much in tax, and that “true reform” would require a tax bracket being scrapped.
“I am in favour of watering down the tax cuts on high-income earners, it’s a good thing, even if low and middle income earners already got a tax cut in stage 1 and 2," he said.
“But removing a bracket should go ahead and the government can do that by making it staged. So, rather than bring all the cuts in on the 1st of July it would gradually be introduced over the next 12 months to give that cost-of-living relief.”
This way high-income earners would eventually see that relief, while those who need it would get it immediately, he said.
The proposal still needs to pass parliament, and would need the support of the Greens and at least two crossbenchers.