Australia’s high earners will benefit most from tax reforms, says thinktank

The Turnbull government’s plan to pursue billions of dollars in income tax cuts over the next seven years will radically alter Australia’s progressive income tax system, shifting more than 80% of workers to a flat tax, according to analysis.

The analysis shows the major beneficiaries of the government’s plan will be Australia’s highest income earners, with the top 10% of earners getting 40% of the value of its tax cuts, while the bottom 30% of earners will get just 7%.

The research, from the progressive thinktank The Australia Institute, comes as the Turnbull government is attempting to persuade crossbench senators to support its budget centrepiece, which was introduced to parliament on Wednesday, and before the Labor leader Bill Shorten’s budget-in-reply speech on Thursday night.

A separate analysis by the National Centre for Social and Economic Modelling (Natsem) of the budget’s tax and transfer changes also suggests high-income earners will benefit most from Tuesday’s night’s budget.

Natsem’s modelling shows that a two-parent family with both parents earning $100,000 and two school-aged children will be $1,022 better off in 2018-19 compared to 2017-18. This will increase to $4,280 by 2024-25.

As the Turnbull government has unleashed the traditional post-budget hard sell, it has faced pressure to reveal detailed costings of its tax plan.

The treasurer Scott Morrison stonewalled on Wednesday when asked to produced a year-by-year estimate of the cost beyond the forward estimates, with the costs escalating in the latter part of the package, which benefits high income earners.

With the high court handing down a decision triggering byelections in a super Saturday in July, the Coalition is concerned Labor will use the mini-campaign to ramp up a “class warfare” offensive, using the tax measures outlined in Tuesday’s budget, including the personal income tax cuts and the company tax cut for Australia’s biggest businesses.

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