Coalition’s next round of income tax cuts shown to benefit men twice as much as women | Australia news

Join Hafta-Ichi to find out the article “Coalition’s next round of income tax cuts shown to benefit men twice as much as women | Australia news”

Men are on course to gain twice as much of the benefit as women if the Morrison government fast-tracks the next round of income tax cuts in the forthcoming budget, according to new modelling.

With the government considering ways to stimulate the flagging economy in next month’s budget, the Australia Institute’s modelling finds that bringing forward stage 2 of the already legislated tax cuts would deliver $2.28 of benefits for men for every dollar that flowed to women.

The progressive thinktank says bringing forward both stage 2 and stage 3 would provide men with $2.19 for every dollar to women.

The report’s author, Matt Grudnoff, a senior economist at the Australia Institute, said bringing forward these income tax cuts in the name of economic stimulus would “mainly benefit high income earners which, in Australia, are overwhelmingly male”.

“Giving tax cuts to the wealthy will have a very limited stimulatory effect on the broader economy, but it will significantly widen the economic divide that already exists between men and women in this country,” he said.

The government has hinted that it may adjust the timing of the tax cuts in the budget, which is due to be handed down on 6 October. The treasurer, Josh Frydenberg, has said tax cuts “put more money into people’s pockets” and could be part of measures to boost aggregate demand.

“More money into people’s pockets means more spending and more spending means more jobs,” Frydenberg told reporters earlier this month after “devastating” national accounts figures confirmed Australia was in recession for the first time in nearly 30 years.

The Australia Institute report, released on Wednesday, looks at the gender distribution of potential changes to the income tax cut schedule.

As it stands, stage 2 – which increases the threshold of the 32.5 cent income tax bracket from $37,000 to $45,000 and raises the threshold of the 37 cent bracket from $90,000 to $120,000 – is due to take effect in the 2022-23 financial year.

The institute has previously released modelling showing the benefit of bringing forward stage 2 by one year to 2021-22 flows mostly to high income taxpayers, with the top 20% getting 91% of the gains.

According to the new report, the gender breakdown of the gains is 70% to men and 30% to women. The report says the reason that men at the top end of the income distribution get much more of the benefit “is that there are far more men on high incomes than women on high incomes”.

The report shows the gender split is similarly skewed if the government brings forward both stages 2 and 3 to 2021-22.

That third stage is currently due to take effect in 2024-25 and would eliminate the 37 cent tax bracket, ensuring that a tax rate of 30 cents in the dollar applies to income from $45,000 to $200,000.

Grudnoff questioned the stimulatory effect of bringing forward these tax cuts, saying higher income earners were more likely than low-income earners to simply save the money.

He said while women had faced a bigger impact from the Covid-19 recession, government stimulus programs had so far focused heavily on male-dominated industries such as construction.

“Investing in employment-intensive industries like healthcare, aged care and education will be more efficient than bringing forward the tax cuts, creating more jobs for every million dollars of stimulus,” Grudnoff said.

“These industries also employ large numbers of Australian women who have been disproportionately affected by the Covid-19 recession.”

Despite the recession, the government has signalled it is likely to proceed with scheduled cuts to the rate of the jobkeeper wage subsidy and the coronavirus supplement for unemployed people later this month.

Cutting the $550-a-fortnight coronavirus supplement before removing it entirely after Christmas could reduce the size of the economy by about $31bn and cost the equivalent of 145,000 full-time jobs over two years, according to a report by Deloitte Access Economics for the Australian Council of Social Service.

Source: The Guardian
Keyword: Coalition’s next round of income tax cuts shown to benefit men twice as much as women | Australia news

Leave a Comment

Your email address will not be published. Required fields are marked *