Ten million low and middle income earners enjoying a $1080 tax cut in the federal budget could be forced to pay more income tax next year.
Treasurer Josh Frydenberg has confirmed today at his traditional post-budget speech that the tax cut is not a “permanent feature” of the system and is scheduled to be axed in next year’s budget.
That means millions of workers earning between $45,000 and $126,000 could be hit with higher income taxes.
The tax cut for low and middle income earners known as the LMITO or the “The Lamington” is a rebate that is paid as a “bonus” when you lodge your tax return.
It was due to expire this year, but the Morrison government extended the tax rebate as a result of the COVID-19 pandemic for the 2021-22 financial year.
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That means if you’re an eligible worker will secure it when you file your tax return after July next year.
It’s designed to stimulate the economy and get families out spending money.
But every year the Morrison government offers the rebate for low and middle income earners it costs a stunning $8 billion.
Asked today if it was likely to be a permanent feature of the budget, the Treasurer provided a clear answer – “no”.
“We can only make decisions on the facts that we have right now,’’ Mr Frydenberg said.
“And that is that we needed to put in place the $8 billion additional year of LMITO, the Low and Middle Income Tax Offset.
“If you are a tradie or a nurse or a teacher earning between $48,000 and $90,000, you get … just over a thousand dollars in your pocket at the end of your tax year. That’s a significant boost to household income.
“But it’s not a permanent feature of the tax system.”
Labor’s treasury spokesman Jim Chalmers said voters needed to keep in mind that the tax cut could be dumped after the election.
“The thing to understand about the tax cuts for lower middle income earners is that they run out after the election,” he said.
“So that is literally a plan to get people through to the other side of the election, when those tax cuts run out. The tax cuts for ordinary working people are temporary, but the tax cuts for the highest income earners are permanent, so people need to understand that.”
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But there’s a big political problem for the Morrison government if it plans to dump the tax cut next year and that’s because massive tax cuts for high-income earners will come into force around the same time.
“What is going to be a permanent feature of the tax system is having one big single tax bracket between $45,000 and $200,000, having abolished 37 cents in the dollar tax bracket,” Mr Frydenberg said.
“That is stage three of our tax plan. And it is affordable.”
But he said Labor also had to answer questions over whether it planned to axe the stage three tax cuts that are already legislated.
“The Labor Party has not said if they are committed to stage three, even though at the time it passed through the parliament they said they supported our tax cuts,” he said.
“But if they were to abandon stage three or propose to abandon stage three, it would mean that somebody on $80,000 a year – so, very much a middle-income earner – would be $900 a year worse off.”
https://news.google.com/__i/rss/rd/articles/CBMinAFodHRwczovL3d3dy5uZXdzLmNvbS5hdS9maW5hbmNlL21vbmV5L3RheC9mZWRlcmFsLWJ1ZGdldC0yMDIxLXRlbi1taWxsaW9uLWF1c3NpZXMtdG8tbG9zZS0xMDgwLXRheC1jdXQtbmV4dC15ZWFyL25ld3Mtc3RvcnkvZTZmYWU5NjI0YWM0MTViYmMxMmQ1NDRhNzY2NDI3NTfSAZwBaHR0cHM6Ly9hbXAubmV3cy5jb20uYXUvZmluYW5jZS9tb25leS90YXgvZmVkZXJhbC1idWRnZXQtMjAyMS10ZW4tbWlsbGlvbi1hdXNzaWVzLXRvLWxvc2UtMTA4MC10YXgtY3V0LW5leHQteWVhci9uZXdzLXN0b3J5L2U2ZmFlOTYyNGFjNDE1YmJjMTJkNTQ0YTc2NjQyNzU3?oc=5
2021-05-12 07:20:38Z
CBMinAFodHRwczovL3d3dy5uZXdzLmNvbS5hdS9maW5hbmNlL21vbmV5L3RheC9mZWRlcmFsLWJ1ZGdldC0yMDIxLXRlbi1taWxsaW9uLWF1c3NpZXMtdG8tbG9zZS0xMDgwLXRheC1jdXQtbmV4dC15ZWFyL25ld3Mtc3RvcnkvZTZmYWU5NjI0YWM0MTViYmMxMmQ1NDRhNzY2NDI3NTfSAZwBaHR0cHM6Ly9hbXAubmV3cy5jb20uYXUvZmluYW5jZS9tb25leS90YXgvZmVkZXJhbC1idWRnZXQtMjAyMS10ZW4tbWlsbGlvbi1hdXNzaWVzLXRvLWxvc2UtMTA4MC10YXgtY3V0LW5leHQteWVhci9uZXdzLXN0b3J5L2U2ZmFlOTYyNGFjNDE1YmJjMTJkNTQ0YTc2NjQyNzU3
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