Top Tax Rate For Millions If Opposition Labor Party Wins Govt., Australian Treasurer Says

Treasurer Josh Frydenberg gives at a press conference at Parliament House in Canberra, Australia, on Nov. 27, 2018. (Tracey Nearmy/Getty Images)

Australian Treasurer Josh Frydenberg said that more than a million Australians would have to pay the top tax rate within six years if the Opposition, the centre-left Labor party, wins government.

This is because Labor would reverse the government’s planned increase of the top marginal tax threshold to $200,000 for 2024-2025, he said.

In an opinion published in The Australian, Frydenberg commented on Labor’s tax plans, which he calls “unprecedented in scale and scope and is part of a big socialist experiment.”

About 1.1 million taxpayers are expected to hit the top tax rate by 2024-2025 if the current $180,000 top rate threshold—which has not changed since 2008—remains unchanged as per Labor’s plans, according to The Australian.

Meanwhile, under the current government’s tax plan, the number of Australians paying the top marginal tax rate is predicted to be at 580,000 in 2018-2019, and increase to 820,000 by 2024-2025 according to Treasury projections (pdf).

Frydenberg said Labor leader Bill Shorten also plans to lift the top marginal tax rate to 49 percent from the current 45 percent and noted that it is a “complete backflip” from Shorten’s push for a 30 percent rate back in 2005.

“At 49 cents in the dollar, Aus­tralia’s top marginal rate would be above the U.S., United Kingdom, and New Zealand and would be one of the highest rates in the world, and cut in at around 2.2 times the average full-time earnings compared to four times in Canada and eight times in the U.S.,” he wrote.

Frydenberg said that Labor’s top marginal rate change is “part of a broader Labor plan for $200 billion in new taxes on housing, savings, business, personal income, and electricity.”

“These are taxes that punish aspiration and are purely designed to redistribute wealth rather than create it. ... While Labor may seek to justify their tax increase by claiming it will raise over $7 billion for spending elsewhere, sadly, the reality is that it will dampen economic activity overall and discourage enterprise,” Frydenberg said.

“Ultimately, Labor’s tax increase will leave the government with smaller pieces of a shrinking pie to redistribute,” he added. “In the words of Margaret Thatcher ‘The problem with socialism is that eventually, you run out of other people’s money.’”

Further Tax Changes

The current coalition government is planning to abolish the 37 percent tax bracket entirely in 2022-2023 so that Australians earning more than A$41,000 all the way up to the planned A$200,000 threshold—about 94 percent of taxpayers—will only have to pay 32.5 cents on the dollar.

But Labor would reverse the coalition’s tax bracket abolition.

“This will put 3.7 million Australian taxpayers earning between $90,000 and $180,000 on a 37 cents in the dollar marginal tax rate rather than 32.5 cents,” Frydenberg said. “Another hit on Australian income earners.”

Shadow Treasurer Chris Bowen speaks to media during the 2018 ALP National Conference in Adelaide, Australia on Dec. 16, 2018. (Mark Brake/Getty Images)

Labor is also planning to introduce a 2 percent temporary budget repair levy until the federal budget is in what Labor deems to be “sustainable, healthy surplus,” which it expects to be achieved by 2022-23, The Australian reported.

Shadow Treasurer Chris Bowen said that Frydenberg’s comments on Labor’s tax policies amount to a “desperate attempt by the government to try to distract the public away from the internal divisions in the Liberal Party,” The Australian reported.

“Labor’s priority on income tax cuts are in delivering bigger, better and fairer income tax cuts for 10 million low and middle Australians over the next few years,” Bowen told The Australian.

From NTD News