Economy

This paper examines the government’s 2018 personal income tax proposals by presenting a distributional analysis of the tax cuts and then looking at some general tax principles and considerations that we can use to assess the present proposals. We begin in the next section by outlining exactly how the government intends the tax cuts to operate.

A new report from the Australia Institute shows that Tasmanian families living in the federal electorate of Braddon benefit less than most other Australian electorates from the income tax cuts outlined in the 2018 federal budget.

The figures represent the change in household disposable income (after tax income) as a percentage of change in the national average. Modelling also took into account tax cuts and other budgetary measures announced in the 2018 budget and then averaged out the benefit in dollar terms to each federal electorate.

The Australia Institute has analysed the average electorate household benefit* from the income tax cuts announced in the 2018 Budget, as a proportion of the National Average benefit.

The figures represent the change in household disposable income (after tax income) as a percentage of change in the national average.

“This tax cut is highly selective. It mostly benefits high income areas and wealthy inner-city electorates,” said Matt Grudnoff, Senior Economist at The Australia Institute.

The Australia Institute commissioned ReachTEL to conduct a survey of 1031 residents across the federal electorate of Mayo on the evening of 5 June 2018.

Key results:

• 2-Party Preferred: Centre Alliance 58% Liberal 42%
• Two thirds (65%) of respondents think the Senate should oppose the top end income tax cuts
• When given a list of options for using government revenue, company tax cuts ranked last of 4 options with just 8.7% support.
• Public spending including health, education, infrastructure the most popular option with 51.4% support