Stage 3 tax cuts will benefit most Australians

Having long advocated for the Stage 3 tax cuts legislated five years ago to be dropped or significantly reviewed, the St Vincent de Paul Society in Australia welcomed the adjustments announced in January by the Prime Minister.

‘We opposed the third stage of the tax cuts formulated by the Morrison Government on the basis that they were unfair and would increase inequity,’ said the Society’s National President, Mark Gaetani.

‘Abolishing the proposed cuts on the basis that they would disproportionately benefit high wage earners was a key recommendation of the research paper we commissioned from the Australian National University (Fairer Tax and Welfare System) and launched in September 2023 at Parliament House.

‘This report showed that in conjunction with a number of other tax, superannuation and welfare related strategies, scrapping or significantly amending the Stage 3 tax cuts would greatly assist people doing it tough, with attention on those people on benefits. If fully implemented, the strategy could lift 834,000 people out of poverty by increasing working age payments.’

After the Prime Minister’s announcement on the eve of Australia Day, Mr Gaetani said the Society believes that all wage earners will benefit from the Stage 3 tax changes because the new schedule is no longer skewed upwards but focused on low and mid-level wage earners.

‘These are the average Australians struggling with the high cost of food, electricity, rents and mortgages and other essentials,’ he said.

‘People on average incomes will see a doubling of their tax benefit and this will help create a fairer Australia, which is the focus of our advocacy positions. The Society is now hearing from many working people who are struggling to make ends meet and who have never contacted a charity for assistance.

‘In recent months, the calls for assistance have risen by up to 40 per cent, making it almost impossible for charities to meet all the demands. We explained this to the Government in our Pre-Budget submission.

‘The reworked tax cuts are considerable and are targeted at providing much-needed help to working households. The benefits will be felt from 1 July onwards. Until then, however, the hardship will continue.’

The National President noted that the cuts were not expected to have an inflationary impact on the cost of living

‘So many things have become unaffordable, such as healthy food and medical bills, and any further upward pressures would be a major impost on working Australians.

‘It was heartening to hear the Prime Minister say that no one will be left behind, but the Society remains concerned that a significant number of Australians may derive little benefit from the revised tax schedule.

‘A number of other economic strategies are needed to assist people doing it tough, with attention on those people on benefits. So many Australians are relying on inadequate welfare payments that keep them struggling day to day. The Government’s own Economic Inclusion Advisory Committee supports working age payments being increased and we also see this as a key social priority.’

Mr Gaetani said the Society holds strong hopes that other relief measures will be announced in the lead-up to the Federal Budget in May or at that time.

‘Our 2024-25 Pre-Budget submission steps out what is needed to improve people’s lives,’ he said.

Read the August 2024 issue of The Record