Stage 3 Tax Cuts To Fail Rural and Regional Australia, Only Benefit East Coast Inner City Residents: Greens Senator

Australian banknotes in Melbourne, on Nov. 7, 2017. (Paul Crocker/AFP via Getty Images)

The Greens are again pressuring the federal government over the stage three tax cuts, with South Australian (SA) Greens Senator Barbara Pocock arguing it will only benefit the rich inner city areas and leave behind rural and regional Australians.

This comes as The Australia Institute’s report ‘Divided Nation’ (pdf) found that the tax cuts would primarily benefit wealthy residents of the inner-city eastern states electorates.

The tax cut legislates the marginal tax rate to 30 percent for people earning between $45,000 (US$29,300) and $200,000 (US$133,900) from July 2024.

The report found that of the 151 electorates in Australia, taxpayers in just 20 electorates will pay $4.8 billion less in tax in 2024-25 due to Stage Three tax cuts compared to the other 131. Those 20 were also dominated by east coast inner Metropolitan electorates in Sydney, Melbourne, Brisbane, and Canberra.

“Outer Metropolitan and Provincial electorates are spread more evenly across the range. Rural electorates are mainly in the bottom half of the beneficiaries and are overrepresented in the very bottom electorates,” the report said.

“There are large differences in the size of the tax cut between electorates. Taxpayers in the Division of Lyons (Tasmania)—the electorate that will benefit least from Stage Three—will pay just $39 million less tax per year. In contrast, taxpayers in the Division of North Sydney—the electorate that will benefit the most—will benefit from cuts totalling $331 million.”

This means that North Sydney will get about eight and half times the tax cut that Lyons will receive.

“The Greens have long called for the Government to scrap the Stage Three tax cuts for billionaires and the wealthy,” Senator Pocock said

“These tax cuts benefit the very wealthy—most of whom live in inner-city Sydney, Melbourne, and Brisbane.”

Pocock said by the federal government continuing with the tax cuts would potentially lose the federal government $244 billion in revenue.

“That could be spent on services like housing, health, education and people struggling with the cost of living crisis,” she said.

Senator Concerned About South Australia

Pocock also noted that the cuts would leave other states like South Australia and Tasmania disadvantaged.

“The Stage Three tax cuts will widen inequality and disadvantage poorer communities—and lower-income states like South Australia,” she said.

The Greens senator said that no SA federal electorates feature in the report’s top 20 electorates to benefit from the stage three tax cuts and noted that, in fact, the only two electorates from South Australia that featured in the report were at the lowest end of the scale.

“Sticking with these tax cuts will deliver a double whammy to SA: relatively little benefit for people in our state and a big cut in public revenue available for the essential services our state needs,” she said.

“If they go ahead, they will put South Australia even more behind the eastern states’ inner suburbs where most of the benefit goes.”  

The report found that two South Australian outer metro electorates—Spence and Kingston—were among the bottom 20 electorates in terms of total tax cut benefits with Spence seeing $53 million returned to its residents and $63 million in Kingston.

Federal Government Determined to Proceed With Stage Three Cuts

However, the federal government has remained firm on the tax cuts, with Finance Minister Katy Gallagher telling ABC on Sunday that the Albanese government would not change its position on the stage three tax cuts.

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“Our position is those tax cuts are legislated, and we haven’t changed our position. My job as finance minister is to ensure quality spending to make some of those difficult decisions. And there are difficult decisions,” she said.

“I don’t want to pretend to anybody that these are easy decisions. They are difficult. But how do we get that balance right? How do we address disadvantages? How do we support those that are the most vulnerable? How do we provide cost-of-living relief within the context of the environment we’re in?”

Mining Electorates Will Benefit From Tax Cuts

According to the report, around 55 electorates will receive a higher-than-average benefit from the stage three tax cuts.

Electorates that had a significant amount of residents employed in the mining industry also saw an increased level of benefit.

For example, the rural electorate of Durack ranked number 27 in the list of top benefiting regions. It is a large Western Australian electorate that takes in many iron ore mines, major offshore gas projects, and other mining regions, “all of which appear likely to increase the number of high-income earners,” the Australian Institute said.

The same is true for the provincial electorate of Capricornia—which has a large mining presence from the Bowen Basin coal mining region of Queensland, the regional city of Rockhampton, and parts of Mackay—and Dawson which has mining and gas hubs.