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Morrison's tax cuts are not temporary or targeted – they are ideological and inequitable

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16.09.2020

At the beginning of the Covid-19 pandemic the Morrison government was adamant that – because the economy would “snap back” once the virus passed – their stimulus spending would be temporary and targeted. Well, you don’t hear much about “snapback” anymore and there is absolutely nothing targeted about the way tens of billions of dollars are being spent by the government.

Let’s be clear, the government’s income tax cuts are perhaps the least targeted or temporary form of public spending imaginable. By definition the benefits of income tax cuts flow entirely to those with incomes above the tax-free threshold of $18,200 – which means not a cent of the benefits will go to those receiving unemployment payments. The regions with the highest unemployment rates and lowest average incomes will get the least support, despite needing it most.

And while it is possible to target income tax cuts at low income workers, that’s not in the Morrison government’s plan. According to modelling by my colleagues at The Australia Institute, if the commonwealth government proceeds with its plans to bring forward the stage 2 tax cuts, the vast majority of the benefits will go to those on above average incomes, with more than 50% going to the top 10% of taxpayers and 90% going to the top 20%. Those on middle and low incomes will largely miss out. The bottom half of all taxpayers will get just 4% and the bottom 20% will get........

© The Guardian


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