New analysis by the Parliamentary Budget Office (PBO) has found that the cost of the “Stage 3” tax cuts will be $313 billion over 10 years — a huge increase on the $254 billion previously estimated.
It was Scott Morrison’s government which made the Stage 3 tax cuts law, with the support of the then Labor opposition. Labor did initially oppose Stage 3 but then decided to support them: it campaigned to keep them in place during the last election.
The Greens, which commissioned the PBO research, described the cost of the tax cuts as a “budget black hole” which, they said, was “withheld from the media on Budget night”.
There is no doubt that these cuts will overwhelmingly benefit the very rich.
The cost — almost a third of a trillion dollars — is so staggeringly big it is difficult to appreciate the scale of this handout.
The ABC came the closest with its interactive online illustration of the enormity on April 28. It highlighted that the Royal Adelaide Hospital at $2.4 billion — one of the most expensive buildings in the world — would be a drop in the bucket compared to the government spend on tax cuts for the rich. For a fraction of the cost, the Anthony Albanese government could raise the rate of JobSeeker.
The ABC also illustrated that the vast majority of the tax cuts will go to the already very wealthy.
It is worth taking the time to look at it because, as the authors say, government expenditure that size “can be pretty hard to wrap your head around”.
“With $243 billion, we can afford almost anything you can dream up,” Julian Fell, Ben Spraggon, Matt Liddy, Tim Leslie and Cristen Tilley say.
Since last May, there has been a growing chorus pleading with Labor to abandon these tax cuts. Socialists, Greens and unions are all opposed. Increasingly too, are economists, academics and commentators: even Liberal backbencher Russell Broadbent has spoken out.
Now, thanks to the The Australia Institute (TAI), it has become clear the majority of workers will be paying more tax in 2025 than they did in 2022. Ordinary working people are literally funding tax cuts for the rich.
The TAI published analysis in April that showed the loss of the Low-Middle Income Tax Offset (LMITO) — which ended in 2022 — when combined with the effects of the Stage 3 tax cuts will mean most workers will be paying more tax in 2025, while only the richest will benefit from the Stage 3 tax cuts.
Based on the median income of different occupations, primary teachers will pay an extra $774 tax, an office administrator will pay an extra $1287 and a store person an extra $1417, according to TAI.
Most occupation groups will pay more tax, whereas politicians, judges and stock brokers will be among the small minority that will gain as a result of the combined effect of the Stage 3 tax cuts and loss of LMITO.
This is taking place when 93% of the benefit of economic growth between 2009 and 2019 went to the richest 10%.
Some remain hopeful Labor will use its 2024 budget to repeal the Stage 3 tax cuts, although Treasurer Jim Chalmers and PM Albanese are resolute they will stay.
Only by escalating the pressure on Labor will we see the end of the Stage 3 cuts.
Green Left will maintain the fight against tax cuts for the rich and for the return to a genuinely progressive taxation system where the rich, who can afford it, pay the most.