Tax cuts 2024/25 Australia explained: New tax rate might be ditched by Anthony Albanese

Australians across the economic spectrum would suffer if Anthony were to scrap Albanian tax cuts promised by both the former government and the Labor party, amid speculation that the country simply cannot afford to go through with the policy.

The 2024/25 tax cut plans would replace the 37 percent rate for those earning between $120k and $180,000 with a 30 percent rate for anyone earning between $45k and $200k.

This would mean more money in the pockets of workers earning between $45k and $200k, as those at the bottom of the scale are currently paying 32 percent and those at the top 37.5 percent.

Treasurer Jim Chalmers on Tuesday kept his pledge to cut taxes, while making comments suggesting the changes may not materialize and calling similar policies in the UK – which have caused financial chaos – a “warning story”.

But Labor heavyweight Wayne Swan, president of the ALP, said any government should definitely look at dumping austerity measures in the face of increased government debt and the looming recession.

Sources have also suggested that the expensive cuts, due to take place on July 1, 2024, could be changed to shave some of the money returned to those at the top of the profit scale.

For example, middle-income earners would still benefit from the planned tax cuts.

Under the changes in their current form, the top marginal tax rate of 45 percent would only apply to those earning more than $200,000.

This would put $11,640 dollars back in the pockets of those making $200,000, while those making $50,000 would get $1,205.

Those earning $30,000 or less would earn nothing from the cuts because their taxable income is too low to even pay taxes.

“I don’t think the government can ignore the threat of a global recession and rising interest rates,” Mr Swan told Nine’s Today show.

“I don’t know if they’ll change their minds, but any government that sits in this environment and says they won’t review all policy institutions in light of what’s happened would stick to its position. head in the sand.’

In the UK, the new prime minister had to make a reversal over the weekend after her announcement that the top tax rate – 45 percent – would be abolished, sparked chaos in financial markets.

Investors soon lost confidence in the nation as the tax cut would lead to more national borrowing, threaten to exacerbate inflation and go far beyond economists had expected.

Fearing a similar event, Mr Swan compared the current international situation to that he faced in 2008 when the global financial crisis saw global economies sink into a prolonged recession.

“If the critics of the government here want to say: don’t pay attention to the international conditions, don’t change a certain setting, we’re going to get a repeat of what happened in 2008,” he said.

“What I’m saying is it’s wise to say you’re going to rethink your institutions in the face of a global recession.”

A source told the AFR that ‘everyone agrees we can’t afford this’.

The Australian Parliamentary Budget Office estimated that the third-phase tax cuts would cost $243 billion over a 10-year period from 2024-25.

While the Liberals have vowed to oppose any step to scrap the tax cuts, the government would likely get support from the Greens and green-blue independents.

The former treasurer, who has argued for a policy review, pointed to the fact that Britain had just dumped similar tax cuts.

“It is the only sensible thing to do, especially in light of what has happened in Britain, where the British government was essentially described as insane and dangerous to continue with policies that even the IMF could not bear.” ‘ said Mr Swan.

The IMF is the international monetary fund, the global lender of last resort to which countries turn when they have huge debts for loans that normally come with strict austerity conditions.

Mr Swan’s hesitation about maintaining the tax cuts was not echoed by Skills and Training Secretary Brendan O’Connor, who appeared on the Today show about an hour later.

“We have not changed our stance on the Phase 3 tax cuts,” said Mr O’Connor.

“Actually, they won’t go into effect for almost two years, but we’ve committed to that position and nothing has changed since we made that commitment.

‘That is our position. It hasn’t changed. Of course we look at the effects on the budget.’

Mr O’Connor said the treasurer and other finance ministers were combing through spending for ‘rorts and waste’ they could cut, but other than that nothing ‘had changed’

The new tax laws, introduced by the Morrison government in 2019 and voted for by Labor, will see the number of braces reduced from five to four for the first time since 1984.

Those earning between the $18,200 and $41,000 tax-free threshold pay a 19 percent marginal rate, while those earning more than $45,000 pay the new 30 percent marginal tax rate.

Treasury figures showed that those earning more than $200,000 a year received the largest tax cut of $11,640, compared to $8,640 for those earning more than $180,000.

An average full-time employee of $92,000 would get back $2,340.

In the 2018-19 fiscal year, 2.3 million Australians earned $90,000 to $180,000 and more of this is the workers who will benefit as the 37 percent marginal tax rate is scrapped at a 30 percent rate.

Only 510,000 people made more than $180,000 a year.

Australia’s 6.1 million Australians earning $37,000 to $90,000 now pay a marginal tax rate of 32.5 percent.

At a press conference on Tuesday, Dr. Chalmers took a swipe at the government of the Conservative Party of Great Britain, led by Liz Truss, after its hasty turnaround. He called the proposed tax cuts a “warning story.”

“The broader point is sufficiently relevant to us that if you mess up monetary and fiscal policies, as the British threaten to do, it affects not only the budget, but also the economy,” said Dr. said Chalmers.

“I see what’s happening in the UK as a warning against that fiscal and monetary balance getting out of hand.

“We must make sure that spending in the budget, especially in these uncertain global times, is focused on what is affordable and sustainable and responsible and sufficiently focused.

“I think that’s one of the lessons from the UK.”

Although the treasurer was adamant, the phase three tax cuts were still underway. Australia’s national debt is approaching a mind-boggling $1 trillion, which is beyond any historical precedent.

With fears of a global recession and Australia with inflation runaway, the government will likely be looking at a debt black hole unless it cuts spending heavily or raises taxes.