11 October 2017

Work released by the PBO today vindicates Labors positon opposing the Governments Medicare levy increase on low and middle income Australians and shows that middle income earners are set to suffer the greatest tax burden under this Governments policies.

Only last year Scott Morrison was talking about delivering inform tax relief for middle income earners like it was the greatest challenge of our time. Despite the Liberal Partys low tax talk, the Turnbull Government is only delivering tax cuts for big business while actually increasing income taxes for low and middle income earners.

The PBO report Changes in average personal income tax rates: distributional impacts release today shows that:

  • The average tax rate for individuals in every quintile is set to increase from 2017-18 to 2021-22
  • The largest increase in average tax rates is expected for people in the middle income quintile earning just $46,000
  • Average tax for the middle income quintile is expected to increase by 3.2 percentage points, much higher than the less than 2 percentage point increase expected for people in the top quintile
  • Average tax rates on middle income earners expected to rise to 20+ year highs.

This report demonstrates that together with bracket creep, middle income Australians will be worse off under Government policy due to their commitment to increase the Medicare levy on lower and middle income earners.

In fact, the PBO specifically states that in addition to the effect of nominal income growth average tax rates are projected to increase due to policy changes, most notably the policy decision to increase the Medicare Levy from 201920.

The Government wants to increase personal income tax on every PAYG worker earning more than $21,000 a year via the Medicare levy while Labor supports a more targeted approach which begins higher up the income tax scale.

This work released by the PBO today vindicates Labors position and shows that middle income Australians are set to fall further behind under this government.

It also demonstrates the Governments priorities when it comes to tax a $65 billion unaffordable tax cut for big business at a time while middle income Australians will see their average tax rates rise to 20 year highs.

At a time when wages are growing at record lows and households are facing a cost of living crunch due to record levels of debt and rising energy costs, now is not the time to be hitting middle Australia with increases in personal income tax rates.

Only Labor can be relied upon to deliver a fairer tax system for all Australians.