Tax imbalance highlighted
Experts say Australia’s tax policies are leading to inequality between rich and poor, and between men and women.
Australia’s “progressive” tax system means the average tax rate increases as the taxpayer's income increases.
However, experts warn recent tax changes are reducing that progressivity.
A gendered imbalance emerges from two facts; men tend to earn more than women, and men are less likely to take time off work for parenting.
The Federal Government has joined other G20 governments in a scheme to lift women's workforce participation.
However, economists and lobby groups say low-income women need specific assistance in getting back into work. Instead, the government is proceeding with tax cuts that will further disadvantage women.
Its plans include removing Low- and Middle-Income Tax Offset (LMITO), which has been paid as a refund when people complete their tax returns, at a maximum rate of $1080 for people who earn between $48,000 and $90,000.
Removing the LMITO from 2021-22 will see women face an average tax increase of $502 per year, but just $385 per year for men, according to report from Bankwest Curtin Economics Centre researchers Rebecca Cassells and Alan Duncan.
At the end of the government’s current plan, when stage 3 of the tax cuts are introduced in 2024-25, women will pay an average of $637 less in net taxes per year. Men will see an average reduction of $2,989 per year.
“There's a real risk associated with stage 3,” Professor Duncan told reporters this week.
“Whichever way you look at it stage 3 creates distortions. The reforms are, as a matter of fact, regressive.”
The Australian Council for Social Services (ACOSS) agrees, pointing out that the lowest 30 per cent of households by income do not benefit at all from tax cuts.
“The Stage 2 and 3 tax cuts, overwhelmingly benefit people on higher incomes, who are mostly men, and reduce government revenue by $30 billion a year from 2024,” ACOSS chief Cassandra Goldie says.
“This is funding that should be going to essential services like child care, social security and aged care, which are crucial to everyone but especially to people on low incomes.”
The Australia Institute says stages 2 and 3 tax cuts will give men more than twice the benefits of women. Its analysis has found that for every dollar of the tax cut women get, men get $2.19.
“Giving tax cuts to the wealthy will have a very limited stimulatory effect on the broader economy, but it will significantly widen the economic divide that already exists between men and women in this country,” says Australia Institute senior economist Matt Grudnoff.
“Rather than spending billions of dollars bringing forward tax cuts that mainly go to men on high incomes, the government could better target that stimulus.”
More details are available here and here.