The stage three tax cuts, due to take effect from July 2024, will disproportionately benefit men and hurt women, especially those on the lowest incomes.
The cuts, which were legislated by the Morrison government back in 2019 (with the support of Labor), will cost $243 billion by 2032-33, according to analysis from the Parliamentary Budget Office.
The changes will remove the 37 per cent tax bracket and lower the 32.5 per cent bracket to 30 per cent, and will also remove the $120,000 to $180,000 tax bracket and increase the top tax bracket to $200,000.
It means that all incomes between $45,000 and $200,000 will be taxed at 30 per cent. Analysis from the Australia Institute shows that those earning $200,000 a year will receive a tax reduction of $9,075 a year, while someone on an income of $50,000 will get a tax cut of $125 a year.
Who will benefit most from the stage three tax cuts?
There’s no getting around it, it’s wealthy, older men who will benefit most from the stage three tax cuts.
Costings from the Parliamentary Budget Office show that by 2032-33, men will get $160 billion from the cuts, while women will get $82.9 billion.
Largely, this is because the people who are going to benefit most from the tax cuts are high income earners, and men are much more likely to earn higher incomes in Australia. Australia still has a significant gender pay gap. The Workplace Gender Equality Agency recently released its update to the average total remuneration pay gap between men and women, with it sitting at 21.7 per cent in 2023.
A report, published in February last year by the Australia Institute shows that men are set to benefit twice as much as women from the stage 3 tax cuts.
While women get 33 per cent of the tax cut, men get 67 per cent of the tax cut. This means that for every $1 of the tax cut that women get men get $2.
The analysis also highlights just how uneven the benefit is when it comes to top income earners. Men in the top 10 per cent of income earners get almost 40 per cent of the benefit of the tax cut, while women in the top 10 per cent will only get 15 per cent of the tax cut.
This is because there are far fewer women in the top 10 per cent of taxpayers.
What about inflation?
As reported by Nine papers today, economists have warned that the cash boost to the wealthy from the stage three tax cuts could fuel inflation and could see the Reserve Bank having to lift interest rates further next year.
It comes amid a cost of living crisis, which we know is impacting women’s economic security, with mortgage repayments and rents increasing significantly recently. The price rises experienced amid high inflation have seen women spending a greater portion of their income on everyday living expenses like food, fuel and medication.
These rising costs, especially housing costs, are leaving single women, young women, single mothers and people experiencing domestic violence behind. These women are the Australians who will suffer most once the stage three tax cuts come into effect next year.
Meanwhile, a 2023 report from the Liptember Foundation showed how cost of living pressures are impact women’s mental heath, with young and middle-aged women in regional areas impacted the most.
The Albanese government is under pressure to abandon the tax cuts, given the dire effect they will have on inequality. However Prime Minister Anthony Albanese has confirmed, time and again, that the government will press ahead with what’s already been legislated.
Treasurer Jim Chalmers has also confirmed the tax cuts will go ahead, saying: “Because they were legislated so long ago, they have been factored into the baseline of the Reserve Bank’s forecast, and indeed the Treasury’s forecast.”
“We haven’t changed our position on stage 3, we do understand that people would like us to do that, one of the reasons they would like us to do that is they want to make sure we are helping people on low and middle incomes as well, and we are.”