[Australia] Cost of living relief approved for workers on less than $150,000

On January 23 in Australia, the Albanese government approved a plan to retain the 37 per cent tax rate, undoing a controversial element of the Morrison government’s stage-three tax cuts passed in mid-2019, The Guardian reports.

Savings from the change will be redirected to low- and middle-income earners in a “substantial” cost of living relief package, announced in a promise by the Prime Minister that “everyone will get a tax cut” including those earning between the tax-free threshold of $18,200 and $45,000.

Though the plan has received criticism, it will reportedly allow Labor to state that it is giving more generous cuts to about 80 per cent of Australians. The stage-three plan would have delivered tax cuts worth $9,000 to high-income earners and led to demands from the Greens and the crossbench to scrap or adjust them to improve fairness.

On January 23, the prime minister declared that he supported “tax cuts and everyone will be getting a tax cut”. The following day Mr Albanese confirmed he would take a new proposal to Labor caucus that was “all about supporting middle Australia” and responding to “cost of living pressures”.

He told reporters in Canberra, “We’re determined to follow the Treasury advice to provide assistance to them.” 

Commenting on his previous remarks that when it comes to delivering the tax cuts his word was his bond, Mr Albanese said his job was “to get the best outcome for Australians”.

As to whether the prime minister would accept that the change amounted to a broken promise, he reportedly argued that since the tax cuts were legislated in 2019, there has been “a pandemic, a recession, global inflation, not one war but two wars that have had an impact”.

“So there [have] been considerable events. But I’ll be very clear accepting responsibility for policies put forward by my government.

“That’s my job. My job isn’t to say I’ll just wring my hands about cost of living pressures that people are feeling. My job is to respond … to make a difference, to make the right decision, not the easy decision.”

The stage-three cuts would have removed the $120,000 to $180,000 tax bracket, increased the top tax bracket to $200,000 and reduced the marginal rate of tax for everyone earning between $45,000 and $200,000 to 30 per cent.

Under the new plan, the 37 per cent tax bracket will be retained but the threshold will be raised from $120,000 to $135,000, according to Guardian Australia. The top rate of tax will apply from $190,000.

Reducing the lowest rate of tax from 19 per cent to 16 per cent for individuals earning less than $45,000 would save low-income earners up to $800. Retaining the 37 per cent tax rate and suggested changes to other rates and thresholds would effectively halve the benefit to people earning over $200,000 from about $9,000 to $4,500.

Source: The Guardian

(Quotes via original reporting)

On January 23 in Australia, the Albanese government approved a plan to retain the 37 per cent tax rate, undoing a controversial element of the Morrison government’s stage-three tax cuts passed in mid-2019, The Guardian reports.

Savings from the change will be redirected to low- and middle-income earners in a “substantial” cost of living relief package, announced in a promise by the Prime Minister that “everyone will get a tax cut” including those earning between the tax-free threshold of $18,200 and $45,000.

Though the plan has received criticism, it will reportedly allow Labor to state that it is giving more generous cuts to about 80 per cent of Australians. The stage-three plan would have delivered tax cuts worth $9,000 to high-income earners and led to demands from the Greens and the crossbench to scrap or adjust them to improve fairness.

On January 23, the prime minister declared that he supported “tax cuts and everyone will be getting a tax cut”. The following day Mr Albanese confirmed he would take a new proposal to Labor caucus that was “all about supporting middle Australia” and responding to “cost of living pressures”.

He told reporters in Canberra, “We’re determined to follow the Treasury advice to provide assistance to them.” 

Commenting on his previous remarks that when it comes to delivering the tax cuts his word was his bond, Mr Albanese said his job was “to get the best outcome for Australians”.

As to whether the prime minister would accept that the change amounted to a broken promise, he reportedly argued that since the tax cuts were legislated in 2019, there has been “a pandemic, a recession, global inflation, not one war but two wars that have had an impact”.

“So there [have] been considerable events. But I’ll be very clear accepting responsibility for policies put forward by my government.

“That’s my job. My job isn’t to say I’ll just wring my hands about cost of living pressures that people are feeling. My job is to respond … to make a difference, to make the right decision, not the easy decision.”

The stage-three cuts would have removed the $120,000 to $180,000 tax bracket, increased the top tax bracket to $200,000 and reduced the marginal rate of tax for everyone earning between $45,000 and $200,000 to 30 per cent.

Under the new plan, the 37 per cent tax bracket will be retained but the threshold will be raised from $120,000 to $135,000, according to Guardian Australia. The top rate of tax will apply from $190,000.

Reducing the lowest rate of tax from 19 per cent to 16 per cent for individuals earning less than $45,000 would save low-income earners up to $800. Retaining the 37 per cent tax rate and suggested changes to other rates and thresholds would effectively halve the benefit to people earning over $200,000 from about $9,000 to $4,500.

Source: The Guardian

(Quotes via original reporting)