Budget Bracket Creep Rules OK
The federal Budget this week announced "personal income tax reductions of $36.7 billion over four years" from 1 July 2006. What does this mean? Well it means that new tax scales will come in for 2006/07 and they will stay that way for four years without any indexation of the dollar thresholds. So to see whether this is better in real terms, you need to project what your pay increases might be over the next four years. We have done some calcs allowing for 5%pa increases. Here are the results (excluding Medicare Levy) for someone on average weekly earnings(AWOTE):
* AWOTE 05/06 $53,352 - Tax $11,866 - Tax Rate 22.2%
* AWOTE 06/07 $56,020 - Tax $12,156 - Tax Rate 21.6%
* AWOTE 07/08 $58,821 - Tax $12,996 - Tax Rate 22.0%
* AWOTE 08/09 $61,762 - Tax $13,878 - Tax Rate 22.4%
* AWOTE 09/10 $64,850 - Tax $14,805 - Tax Rate 22.8%
So average tax rate over the next four years is 22.2% versus 22.2% in 2005/06. Are you better off in real terms? No - for AWOTE income people just the same. Try the same example for your own income on the FinDem Tax Calculator in Research Centre. Higher than AWOTE people are better off - lower not so on tax scales but family benefits etc. may improve the situation. Have you read this sort of analysis elsewhere or heard it from the leader of the Opposition - Contact Us if you have!
Posted Thursday, 11 May 2006
- Friday, 27 Nov 2020 - RIR and Why Oz needs a Heath System Tax (HST)
- Saturday, 11 Apr 2020 - Back to Work with Covid-19? - Not so Fast!
- Tuesday, 7 Apr 2020 - Key people charting the Australian Recovery
- Wednesday, 1 Apr 2020 - Population Mortality effects of CoVid19
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