By Barddylbach
Budget 2018 tax breaks smoke and mirrors – the higher incomes get the tax-breaks and the lower incomes are paying for it … and don’t forget!
The 2018 budget tax reform is all smoke and mirrors or should that be snakes and ladders! Australians are being conned into election mode and being bought-off with crumbs from the table. This is not reform, just more of the same and don’t forget the more immediate big end of town $80 billion tax cuts. The reality that no-one is reporting in the press anywhere (other than here) is that the current and flatter proposed systems are both way out of whack and unfair to lower-middle income earning Australians. Compare the three countries below: UK, Australia and New Zealand from what I can glean so far (allowing for exchange rate differences, UK equivalent dollar values given). Should raise a few eyebrows!
1) Simply put the biggest elephant in the room is that Australians earning between $37,000 and $87,000 are paying 32.5% tax compared with 20% in the UK and that is fundamentally not going to change. The threshold from 19% to 32.5% is $37,000 when the UK is double that at $83,533 and that is where the key problem is, since this captures most Australians (lower to middle income bracket). Raising it to $41,000 in 2021 is a long delay and mere tinkering, not meaningful reform.
2) Morrison/Turnbull propose to expand and flatten this basic tax rate band up to $180,000+, which means a hard-working Australian earning $45,000 (at the lower end of this huge band) will be paying the same rate (32.5% tax) as a business executive at $180,000. In the UK that ‘hard working Australian’ on $45,000 would only be paying 20% tax and the business executive would be paying 40%. So who here is missing out and who is the winner? This sound fair to you? See where Turnbull’s priority lies? Turnbull calls it fair and talks about incentives … ha ha! Try finding a job at $180,000, ordinary Australians have to make do with far less however hard they work, train and educate themselves (and that costs them a fortune too, no mention of that). So reduce the number of bands, flatten it if you like, but that bottom threshold for basic rate needs to be up around $90,000 not $37,000 or $41,000 … geez, that’s the minimum wage!
3) It shouldn’t escape your notice that the income tax threshold clicks in at $18,200, $3,000 less than in the UK, so the lowest worker and the alleged the minimum wage (many are paid below this), both pay more tax than their equivalent in the UK. In New Zealand the equivalent basic tax rate is 1.5% less at 17.5% and runs through to $48,000 ($11,000 higher). And the next rate of tax is 2.5% less at 30% up to $70,000.
4) Turnbull’s notion of incentive only applies to a limited number of middle incomes immediately breaking the $87,000 threshold, but it is marginal because all you earn under that would be at the lower rate of 20% (not 32%) if you were in the UK. So it is more important to shift that threshold up than reduce the rate of tax.
5) UK top tax is the same rate (45%) but note the threshold is significantly higher, which means there is no difference at the top level, just that in Australia higher rate tax clicks in at lower thresholds. New Zealand are very generous on the rich at 33%, however at a threshold of $70,000 are paying significantly less tax at this level. But remember when you are earning at this top rate $180,000, $270,000 or more, it makes little difference to your life style paying 45% tax on income above the threshold pretty much wherever it falls, unless you count the difference between one mansion and two; a BMW or roller, a tropical island in the South Pacific, your very own printing press or a modest financial institution private debit card and debt collection company. You are going to put your investments and new earnings offshore or not pay tax at all as they do at the big end of town.
6) Of course, no mention and no change to the relentless Liberal and National war on the poorest, youngest, unemployed, under-employed Australians, straddled between Centrelink, the Indue cashless welfare card and oblivion. $40 per day Newstart no change and pensioners 60+ can look forward to practically nothing if they lose their job or become unwell, least until they are 70; enjoy with a few years tread to go before you die. That’s the life unless you are a member of Parliament and then you have super-economic powers to live like a Lord, but I think that is more to do with privileges, parliamentary wages, expenses, allowances, pensions and private business interests than $40 a day budgeting skills or perhaps it is an Australian super-hero’s delusion … Get back in your cage!
7) Don’t forget the multibillion dollar tax give away to big business, big end of town. Malcolm is hoping you have forgotten that already … Oooops and don’t forget the multibillion dollar tax give away – Oh stop it!
Compare the three:
UK
Band Taxable income (Up to) Tax rate
Lowest rate <$21,356 (£11,850) 0%
Basic rate <$83,533 (£46,350) 20%
Higher rate <$270,355 (£150,000) 40%
Top rate +$270,355 (£150,000) 45%
AUS
Band Taxable income (Up to) Tax rate
Lowest rate <$18,200 0%
Basic rate <$37,000 19%
Higher rate <$87,000 (to be 180,000) 32.5%
(to be deleted <$180,000 37% )
Top rate +$180,000 45%
NZ
Band Taxable income (Up to) Tax rate
Lowest rate <$14,000 10.5%
Basic rate <$48,000 17.5%
Middle rate <$70,000 30%
Higher rate +$70,000 33%
Top rate No notification 48%
Fraudsters Morrison and Turnbull, stitching up the budget, stitching up the electorate, conning ordinary Australians with crumbs from their table, a lot of salience bias, dressing, Liberal navel gazing – snakes and ladders.
Now what mustn’t I forget?
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