Discussion paper

While the inherent inequality of the Stage 3 tax cuts is widely understood—with higher income earners to benefit disproportionately from the policy—the geographic implications of that inequality are not.

This paper calculates how the Stage 3 tax cuts will be distributed amongst all 151 federal electorates in Australia. This analysis finds that the lion’s share of Stage 3 cuts will go to seats classified by the Australian Electoral Commission (AEC) as Inner Metropolitan seats, a classification only applied to seats in capital cities. Of the 20 electorates that benefit most from Stage 3, 17 are Inner Metropolitan seats. Half of these electorates are in Sydney, and a quarter in Melbourne.

By contrast, electorates classified by the AEC as Rural benefit the least from the Stage 3 cuts: 12 of the 20 electorates (60%) that get the least benefit from Stage 3 are Rural seats.

These results reflect the fact that the Stage 3 tax cuts will go mainly to high income earners. About half of the Stage 3 tax cuts over the next 10 years will go to people earning more than $180,000 per year. Those on less than $45,000 per year, meanwhile, will save nothing at all.

This analysis shows that the high-income earners who will benefit most from the tax cuts are largely clustered in the inner metropolitan areas of our large capital cities. Rural areas, on the other hand, are more likely to be home to lower income earners, who will receive little or no benefit from Stage 3. There is already a stark income divide between Australia’s capital cities and its rural areas.

The Stage 3 tax cuts will only widen this divide, giving an oversized benefit to those with the most, and almost no benefit to those with the least.

Related Information

Fair go gone: stage 3 tax cuts and LMITO by occupation https://apo.org.au/node/317029

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