Budget Analysis: Modest relief for taxpayers – if it actually happens

The Australian Taxpayers’ Alliance (ATA), a 75,000+ member non-partisan grassroots advocacy body representing the interests of Australian taxpayers, today commended the federal government for providing modest tax relief for Australian workers and businesses through modest tax offsets, but called on Canberra to do more as well as curtail waste and overspending.


 “While the budget provides modest relief, tax as a percentage of GDP is forecast to rise from 22.7% to 23.9% over forward estimates – nearly the highest rate in Australian history. This ensures that taxpayers continue to shoulder a greater burden than necessary” said ATA Director of Policy, Satya Marar. “High taxes are a handbrake on our prosperity, a disincentive to work, entrepreneurship and human development, and a barrier to foreign investment and our international competitiveness. While the long term measures in this budget are to be commended, there remains considerable doubt as to whether they will ever be implemented. This would be a perfect plan if it was all implemented this year.

“Although the Turnbull government should be commended for committing to lifting the 32.5% tax bracket threshold to $120,000 from $87,000 by 2022, the failure to index tax brackets to inflation means that it is not a permanent solution and will see many working Australians continue to pay more as they are pushed into higher tax brackets without increase to their real wages after 2022. Modest tax offsets for low and middle income earners will also provide an effective tax cut of up to $530 a year for millions of Australians on incomes under $90,000. Abolishing the 37% tax bracket by 2024-5 is another welcome change which will benefit millions of Australians earning less than $200,000 and provides for a simpler tax system that maintains incentive for ambition and career progression.

“We further welcome news of an expected return to fiscal surplus by 2020-21 and the opportunity to start pay down the $600 billion+ gross national debt, over $40,000 per Australian household. However, given that these forecasts are based on positive expectations of GDP growth rising to 3% on the back of globally favourable conditions and strong commodity prices, we call on the government to meaningfully reduce waste and overspending to ensure we live within our means without shouldering future generations with high tax and debt.

“Modest spending restraint is to be applauded, including reducing general public services and securing greater efficiencies in the Department of Defence. However total spending is increasing from $468.8billion to $540.8 billion – an increase of almost 70 billion dollars, including an additional $30 billion just for welfare payments. Other examples of government waste include $26 million for an unneeded Australian space program, $20 million to fund a ‘business case’ report for streamlining business registration which is better spent on actually streamlining the 40 different registries into a single digital registry, and no reforms to upper class welfare like the childcare subsidy available to those on incomes up to $300,000, including families where one parent stays at home.

“We also call on the government to ensure that the $24.5 billion schools funding package delivers improved educational outcomes through comprehensive monitoring and outcomes-contingent funding. Australian students lag behind their Asian counterparts in crucial Maths and Science performance despite commonwealth spending far more per student than these countries. Taxpayers deserve transparency and fairness in educational spending which the government’s ‘national blueprint for declining school performance’ will not adequately deliver. $75 billion over the next 10 years in infrastructure projects should similarly be subject to comprehensive review to ensure that projects are based on need and not political factors.

“We also note that outlawing cash payments over $10,000 is a significant violation of civil liberties. It is absolutely ridiculous that the government will be making paying people with cash illegal and undermines a fundamental right from the birth of civilisation.

“Overall, despite a number of shortcomings, the FY2018-19 budget contains significant long term relief for taxpayers. The challenge, however, is to ensure that these actually occur.


Satyajeet Marar, Director Of Policy, Australian Taxpayers’ Alliance, smarar@taxpayers.org.au  +0409 670 378

Satyajeet Marar will be available for in-person interviews & budget-related analysis in Canberra this week.

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