Since Labor won the election, the treasurer, Jim Chalmers, has been hosing down expectations of an economic turnaround. Wage growth isn’t likely in the near term, inflation is expected to hit 7.75% by the end of the year, and the budget is “a trillion dollars in debt”.
Those economic challenges make it hard to see how the government can hold on to the Morrison government’s stage three tax cuts. Ultimately passed with Labor’s support, the stage three cuts create a flat tax rate of 30 cents in the dollar for anyone earning between $40,000 and $200,000, abolishing an entire rung of Australia’s progressive income tax ladder.
Getting rid of them is not something Labor is entertaining at present. But what if they were scrapped? What if there was an extra $243bn in the budget over the next 10 years? What could be done?
We’ve put together an interactive budget you can build using that money. Choose from different categories and measures to see how far $243bn can go:
There are a few things we know about the stage three cuts. Almost twice as many male workers will benefit compared to females, and the gains will overwhelmingly flow to people making more than $180,000 a year.
The budget could barely afford them when they were passed. But now, with slowing growth, global economic shocks and a labour market almost at capacity, many are saying the cuts are untenable.
The numbers in this interactive aren’t absolute – in some cases we’ve had to estimate, or spread a cost over 10 years, but it does provide a guide.
The measures come from a range of groups and political parties, although it should be noted that some would prefer the tax cuts be implemented, rather than spending the same money on other things. We’ve also included the option to reform two other often-criticised tax breaks: negative gearing and capital gains discounts for investment properties. That could give you even more money to allocate.
Notes
We’ve used the largest cost available for the stage three tax cuts, which comes from this Parliamentary Budget Office document prepared for the Greens and includes the estimated cost of the cuts to the budget over nine years. For the sake of simplicity, we have averaged other costs to a yearly basis where possible, and put these as ongoing costs over 10 years for continuing measures, or presented them as one-off costs over a single year or multiple years where appropriate.
Some rates were calculated by Guardian Australia based on a the single most recent year of expenditure (raising the Medicare rate for GP consultations), or by using a percentage of a policy that has already been costed by the Parliamentary Budget Office (the $70 a day welfare increases). All of the figures included in this interactive should be considered as estimates only.
Sources listed for costings indicate the organisation that provided the estimate – and not necessarily that they endorse scrapping the tax cuts and spending the money on those policies.
