Briefing paper

Tax cuts by electorate: who gets how much from the government’s tax cut plan?

Taxation Income tax Australian federal election 2019 Australia
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The government is planning to substantially flatten the income tax rates by removing the 37 cent tax bracket by 2024-25. Previous Australia Institute research shows that this will make income tax less progressive.1 Australia Institute research also shows that the majority of the benefit (54 per cent) of this tax cut goes to high income earners (the top 20 per cent of taxpayers).

The distribution of the tax cuts by income is an important part of better understanding the impact they will have on the community. Another important way of understanding them is by looking at the geographic distribution of the tax cuts.

This paper takes modelling done by the National Centre for Social and Economic Modelling (NATSEM) of the Government’s income tax plan by federal electorate. Decisions about taxation are made by the Parliament and half the Parliament is made up by representatives from electorates with the rest being made up by state representatives. This means that these geographic locations are important in understanding how political decisions are made.

An analysis on the tax cuts by electorate shows that the electorates that benefit most are in affluent areas of Sydney and Melbourne, with Brisbane the only electorate outside Sydney and Melbourne to appear in the top ten.

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