The modelling, based off the government’s own figures and tax office data and obtained by The Sydney Morning Herald and The Age, shows the 90 per cent of taxpayers earning below $180,000 will receive $65.7 billion of the tax cuts from stage three of the package or 69 per cent of the total benefit. That is compared to 31 per cent of the benefit going to the 10 per cent earning above that threshold.
The Greens will latch onto the findings to lobby One Nation and Tasmanian Independent Jacqui Lambie to reject the tax cuts in a last-ditch effort to scupper the Coalition’s signature election package after key Centre Alliance crossbenchers declared their intention to support the policy on Thursday.
Greens Leader Richard Di Natale wrote to Senator Lambie and One Nation leader Pauline Hanson on Thursday, arguing only 1.3 per cent in northern Tasmanian seats of Bass and Braddon and only 1.8 per cent of people in regional and rural Queensland earn more than $180,000.
“Around the same amount of people will benefit in the Prime Minister’s seat of Cook [in southern Sydney] alone than the Queensland electorates of Dawson, Maranoa and Capricornia combined,” Senator Di Natale wrote, referring to those earning over $180,000.
The governmnent’s chief negotiator, Mathias Cormann, is just one vote short of the crossbench senators needed to see the ten-year, three stage flattening of the tax system through Parliament. Senator Lambie and Centre Alliance have indicated they will vote as a bloc, meaning the tax package is likely to pass as soon as next week.
Stage one will see most workers get a $1080 tax cut in their tax return in July. Stage two will see that benefit doubled from 2022-23.
Neither of the first two stages are controversial, but stage three, where a flat tax rate of 30 per cent will be applied to all incomes between $40,000 and $200,000 at the cost of $95 billion from 2024-25, will see the largest benefits go to higher income earners because they pay more tax.
“Stage three will do nothing for the communities around Australia who need it most,” said Senator Di Natale.
“Cutting $95 billion from the budget will impair future governments in providing the crucial public services and infrastructure that the Australian people want and deserve, from funding regional health, lifting Newstart and supporting our ageing population.”
Labor has described the third stage of the package as “economically irresponsible” and went to the election attacking the tax cuts for “the top end of town”. It has since softened its position but faces ongoing internal division over how it will vote next week and has asked the Coalition to split the three stages of the package.
The government has refused.
Opposition leader Anthony Albanese said the government should bring forward part of stage two of the package to give most workers an even bigger tax cut in July – worth $1350 – to pump money into a sagging economy.
“If we just gave a tick without any thought to the national economic interest then we’ve excluded ourselves from any input,” he told Sky News on Thursday. “What we’re doing is making sure that we do have input.”
Labor sources said it was likely that the opposition would put up amendments next week when Parliament resumes but ultimately pass the package if they were unsuccessful.
NSW, where 160,000 people make up 37 per cent of all those earning more than $180,000, will benefit most from stage three of the tax cuts. Victoria, where 105,000 people make up 25 per cent of those earning $180,000 or more will see the second largest gain from stage three.
Queensland, which makes up 20 per cent of taxpayers, only has 16 per cent of those earning above $180,000 according to the latest Australian Tax Office data.
South Australia, Tasmania and the Northern Territory make up less than 10 per cent combined of all those earning more than $180,000.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.