The Morrison Government is yet to legislate the additional tax cuts announced in the 2019-20 Federal Budget. This 2019 Tax Plan builds on the tax package announced in the previous 2018-19 Budget, and comprised of three stages. The Section 3(a) income tax cuts, which would come into effect in 2024-25, propose decreasing the 32.5 per cent personal income tax rate down to 30 per cent.

Key findings:

• The Section 3(a) income tax cut will overwhelmingly benefit high-income earners with almost one-third of the benefit going to the top 10% of taxpayers, and over half the benefit (52.7%) flowing to the top 20% of taxpayers.
• The bottom 20% of taxpayers receive a mere 0.2% of the benefit of this tax cut, with the bottom 10% of taxpayers receiving nothing at all.
• These tax cuts will not come into effect until 2024-25 and will cost the budget $95 billion over five years.
• These tax cuts represent another attack on the progressive nature of Australia’s income tax system. They come after the Government has already legislated a significant flattening of the income tax system.
• While changes to the Low and Middle Income Tax Offset (LMITO) come in immediately and enjoy bi-partisan support, the final stage is far into the future and potentially faces stronger opposition in the Senate.