The REAL number of Aussies betrayed by Anthony Albanese’s Stage Three tax cut broken promise – and how much the losers will be worse off
More than 800,000 Australians will pay more tax as a result of Labour’s Stage Three tax cuts.
And that’s before the effects of higher wages and inflation β meaning the real number is likely significantly higher.
More than 1.2 million employees will also be forced to pay a higher tax bracket, but of that group, 819,000 will probably pay more tax.
Prime Minister Anthony Albanese last week announced two major changes to the tax system that will impact middle and upper income earners – as he broke his promise to deliver on the Morrison government’s phase three cuts.
Under the new plan, the 37 percent tax bracket will remain in place for those earning between $135,000 and $190,000. Meanwhile, the 45 percent tax bracket will kick in at $190,000 instead of $200,000.
These changes would see 819,051 taxpayers forced to pay a higher tax bracket compared to the existing Phase Three plan β which covers 5.4 per cent of Australia’s 15.134 million taxpayers.
That’s a conservative estimate based on Australian Taxation Office data for 2020-2021, the most comprehensive figures available.
Wage increases since then to keep up with high inflation mean even more workers will be pushed into higher tax brackets.
Those with low six-figure salaries are particularly vulnerable and could end up paying $14,000 more per year in taxes if they get a promotion in the coming years.
More than 800,000 Australians will either be pushed into a higher tax bracket or pay more tax as a result of Labour’s Stage Three tax cuts β and that’s before the impact of higher wages and inflation (pictured are shoppers in the Pitt Street Mall in Sydney)
Labor no longer supports the former coalition government’s phase three plan for a 30 percent tax band for those earning $45,000 to $200,000 from July 1, 2024, despite the opposition backing that law in 2019.
The Albanian government will now propose new legislation to cancel plans to reduce the number of tax brackets to four from the current five for the first time since 1984, as part of a plan to raise $28 billion over ten years from the tax brackets.
In total, 1.287 million workers, or 8.5 percent of taxpayers, earn more than $135,000.
But those worse off earn more than $160,000 β that’s 819,068, or the top 5.4 percent of taxpayers.
Those earning $160,000 will be $946 a year worse off under Labor, with their tax burden falling by $3,729 under this plan from $4,675, an H&R Block analysis found.
High performers with a salary of $180,000 will be $2,346 worse off per year, with their tax liability falling by $3,729 from $6,075.
Australians on a $200,000 salary will be $4,546 a year worse off, with their tax liability falling by $4,529 from $9,075.
Those earning $135,000 to $160,000 actually pay less tax because they benefit from the lower marginal tax bracket for those with incomes between $18,200 and $45,000.
But those currently earning six-figure salaries will be subject to a salary increase when their wage level rises above $135,000, creating a 37 percent marginal tax rate.
That means someone earning $120,000 who gets a raise now could end up paying $13,925 more in taxes if they get a promotion and see their salary increase to $150,000.
The 37 percent marginal tax rate currently applies to incomes above $120,000 but below $180,000.
![The REAL number of Aussies betrayed by Anthony Albanese's Stage Three tax cut broken promise - and how much the losers will be worse off 2 Prime Minister Anthony Albanese announced last week that the 37 percent tax bracket would remain in place for those earning between $135,000 and $190,000, as the 45 percent tax bracket would start at $190,000 instead of $200,000 (he is pictured on the right with his girlfriend Jodie Haydon at the Australian Open men's singles final in Melbourne on Sunday evening)](https://nybreaking.com/wp-content/uploads/2024/01/The-REAL-number-of-Aussies-betrayed-by-Anthony-Albaneses-Stage.jpeg)
Prime Minister Anthony Albanese announced last week that the 37 percent tax bracket would remain for those earning between $135,000 and $190,000, as the 45 percent tax bracket would start at $190,000 instead of $200,000. Open men’s singles final in Melbourne on Sunday evening)
Under Labour’s phase three plan, someone with an income of $150,000 would pay $43,113 a year in tax, compared to someone with an income of $120,000, who would pay $29,188. at a marginal tax rate of 30 percent.
At the other end of the scale, 4,385,353 individuals or 29 percent of taxpayers earning between $18,200 and $45,000 benefit from their marginal tax bracket dropping from 19 to 16 percent.
The average full-time worker with an income of $95,581 is $804 a year better off, as is a middle-income earner with an income of $67,600. The government has provided an average salary of $73,000 for part-time and full-time workers.
Someone with an income of β¬70,000 will see their tax relief increase from β¬675 to β¬1,429.
A first-year teacher in NSW who is paid $90,000 and receives overtime will see his tax credit rise from $1,125 to $1,929.
Treasurer Jim Chalmers played down Labour’s broken promise to maintain the Coalition’s third phase of tax cuts.
‘What is important here is not the political argy-bargy; what matters are the tangible benefits for central Australia,β he told reporters in Canberra on Monday.
βEveryone gets a tax cut, but there will be a bigger tax cut to help more people with their living costs, and that’s what this is about.β
Dr. Chalmers said Labour’s plan would essentially address ‘brack creep’, returning more to lower income levels, benefiting those earning up to $160,000 a year.
βI also wanted to make this point about brace creep: There is more than one way to reduce brace creep,β he said.
![The REAL number of Aussies betrayed by Anthony Albanese's Stage Three tax cut broken promise - and how much the losers will be worse off 4 1706490430 42 The REAL number of Aussies betrayed by Anthony Albaneses Stage](https://nybreaking.com/wp-content/uploads/2024/01/1706490430_42_The-REAL-number-of-Aussies-betrayed-by-Anthony-Albaneses-Stage.jpg)
βOur plan is relief and reform β it is cost of living relief and it is also important tax reform to improve and strengthen the tax system going forward.β
Labour’s revised phase three tax package would cost $359 billion over ten years, compared to the Coalition’s $388 billion over the same period.
βBy dropping two rates and removing two thresholds, we are giving everyone a tax cut, but delivering $359 billion in tax relief and putting tax relief back where we can do the most good,β Dr. Chalmers said.
Real wages, adjusted for inflation, have fallen since 2021, before Labor came to power.
Wages rose 4 percent in the year to September, while the consumer price index rose 5.4 percent, effectively giving workers a 1.4 percent pay cut.
The monthly inflation measure for November fell to 4.3 percent, with the Treasury Department expecting wages to finally surpass inflation in 2024.
Australia’s worst inflation in a generation occurred after Labor refused to extend tax relief measures introduced by the Coalition.
The consumer price index reached a 32-year high of 7.8 percent in December 2022.
This was six months after the expiry of the former coalition government’s low and middle income tax offset, which provided $1,500 relief for those earning $48,000 to $90,000.