Lies, damn lies and statistics: The real story behind the tax reform debate
April 2016
So what does the landscape truly look like for tax reform?
Australia: A snapshot of taxpayers
Looking at the statistics for, it's easy to see how the tax debate can become easily skewed. Any policy that offers broad-based income tax cuts, concessions or incentives is immediately going to benefit higher income earners because they pay more tax.
Consider the statistics:
- Australia has a working age population of 15.6 million
- 81% of those people paid income tax totalling just over $166 billion
- 2.9% of all taxpayers are very high income earners with incomes above $180,000 and contributed almost 30% of all income tax collected.
- The largest contribution from income tax comes from 16.6% of taxpayers who earn between $80,001 and $180,000
- 2.6 million of our working age population pay no tax and 5.6 million pay on average $1,400.
The negative gearing debate
One of the recent areas of fierce debate is in the benefit of negative gearing for higher income earners. Negative gearing only really works as a strategy if a taxpayer has enough tax to off-set rental losses.
The Superannuation concession benefit
Taxpayers with the most income and wealth benefit most from superannuation concessions, because it is an attractive savings and wealth management vehicle for middle and higher income earners because of the highly concessional tax treatment of contributions and earnings.
The social welfare system
The other side of the equation is the social welfare system, which is an essential part of any strong community. The latest statistics show that 27.5% of Australia's working age population receive some form of welfare, which is lower than its peak of 31.4% in 2002.
Cutting through the noise
In the lead-up to the election and the ongoing debates around tax, concessions and welfare, the fundamentals of the economy are continuing to prove challenging for the Government to communicate to the electorate in a way that contextualises the reform debate effectively.
How will the upcoming budget impact you?
We will be providing a post-Budget commentary on policy announcements, tax changes and the implications for you and your business. It will be interesting to see whether the Turnbull/Morrison budget nips and tucks around the edges or aims for real reform. Follow us on Twitter for Budget Night commentary.
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Disclaimer
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
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