# Drop in Aussie taxes - but who really benefits?



## andfvp (29 March 2008)

I recently wrote a post about the planned 2008-2009 tax cuts and questioned if they were fair for all? It would be great to get your feedback on the tax cuts and to see who really benefits.

In summary, here are the tax cuts:

- Workers earning $15,000 or less will have their tax rates cut by 75 per cent, to just $150 a year
- Those earning $35,000 a year will get a tax cut of $20.19 a week, equivalent to 3 per cent of their salary
- Those on an average wage of $55,000 are in line for an extra $15.86 a week; and those on $60,000, $11.53.
- At the higher end, those on $150,000 or more a year will get the equivalent to just 0.7% of their pay or about $20 a week.

Personally I think they are not going to help much, just fuel inflation.

Andy


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## trishan9390 (29 March 2008)

*Re: Drop in Aussie Taxes - but who really benefits*

It will mean uni students like myself who earn in lower end of the scale have more money to pay uni fees which is a good thing. So we definitely win.

I agree, inflationary pressures are a concern though. 

It seems politics will once again take precedence over good economics. These tax cuts were an election promise as I understand and the gov wants to fulfill the promise regardless of inflationary pressures and harm it may do to the economy.


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## Bill M (29 March 2008)

*Re: Drop in Aussie Taxes - but who really benefits*

There are some people in jobs that pay very low incomes and these tax cuts will help them afford the basics of life a bit better. Anything that can help these low paid workers is a great idea I think. Here is a bit out my newspaper this morning:

"The Penrith hairdresser, 17, yesterday welcomed Kevin Rudd's plan to ease the tax burden of low income earners.

Hairdressing is one of the lowest paid occupations, particularly for trainees who earn just $240 a week in their first year."

Full Story Here


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## agro (29 March 2008)

fuel inflation i agree

its generally the low income spenders who spend the most on their credit cards etc.. (not sure if thats a stereotype or a myth??) 

would be good to see tax cuts all round like the ones offered by Costello because it does seem a bit discriminative against those in the upper brackets.  

labour government have always been about working class families though.


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## trishan9390 (29 March 2008)

agro said:


> its generally the low income spenders who spend the most on their credit cards etc.. (not sure if thats a stereotype or a myth??)




Seems like a sweeping generalisation to me.


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## agro (29 March 2008)

trishan9390 said:


> Seems like a sweeping generalisation to me.




i meant low income earners spend more.. because they cannot see a future as such they spend the money that they have today e.g. as soon as they get it..

who is the biggest customer for the pokie machines? the low income earner or the high income earner?

where do you find the pokie machines? in the low income areas..

its all sociology


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## reece55 (29 March 2008)

andfvp said:


> I recently wrote a post about the planned 2008-2009 tax cuts and questioned if they were fair for all? It would be great to get your feedback on the tax cuts and to see who really benefits.
> 
> In summary, here are the tax cuts:
> 
> ...




Andy
Tax cuts almost always have to be employed by Government to keep up with inflation. If this weren't the case, then we would all be effectively be losing out and getting taxed more on the basis of prior year purchasing power.

That being said, if Governments cut too far over the inflation level, then it does mean more disposable income and therefore more spending on discretionary items, and hence more inflation.

To me, it's probably not going to help that much, but every cent counts when you have a family....

I think if the Liberals hadn't committed the rate cuts, then the labour Government would probably have a closer look. But no Govt wants to go back on a promise, least of all one that has just broken 12 years of a Liberal Govt.....

Cheers


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## wildkactus (29 March 2008)

These Tax cuts are ok they will help some people.

But I think it would have been better to reduce the company tax for business with a turn over of less then say 10 million a year to 20%, as this would then enable them to employ more, spend more,etc.
Remember we have a lot small business in australia that could employ more people and give better wages if conditions were better for them. The Small business is mostly forgot by the tax man.


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## chops_a_must (29 March 2008)

agro said:


> i meant low income earners spend more.. because they cannot see a future as such they spend the money that they have today e.g. as soon as they get it..
> 
> its all sociology






agro said:


> fuel inflation i agree
> 
> its generally the low income spenders who spend the most on their credit cards etc.. (not sure if thats a stereotype or a myth??)
> 
> ...




It tends to be those earning between 35,000 and 70,000 a year that put most on credit, apparently.

But historically, yes, low income earners spend the greatest percentage of their income on essentials. It couldn't be any other way.

They are also the ones most impacted by rising inflation, but the ones that contribute least to it. So any calls for further cuts to higher income earners is crap. That's who you need to target in times like this to flatten out the peak.


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## Julia (29 March 2008)

The very high income earners have had more than their share of tax cuts in the past courtesy the Howard government.

I would have preferred that the money be paid in the form of superannuation - when the people who need assistance get it, but in a form which is much less likely to add to our existing problems with inflation.


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## son of baglimit (29 March 2008)

agro said:


> would be good to see tax cuts all round like the ones offered by Costello because it does seem a bit discriminative against those in the upper brackets.
> 
> labour government have always been about working class families though.




as julia has highlighted, in the budget of may 2006, it was those higher brackets that benefitted, with little offered to the lower brackets. 

naturally, in an election year (may 2007), it was the working class that was offered the juicy tax cuts.

i imagine the promised cuts in 09 & 10 will be cut back, but delivered lovingly in may 2011 - just in time for...............


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