Treasurer Scott Morrison has given tax relief to millions of lower and middle-income workers, and an extra $530 a year in savings to some, in measures announced in the 2018 Federal Budget on Tuesday.
He also announced plans to reduce the tax burden for high-income earners in the coming years.
By 2023, higher income earners will also pay less tax. Those earning up to $120,000 will pay 32.5 per cent income tax.
"94% of working Australian will pay no more than 32.5per cent tax," he said in his budget speech.
Under his 7-year income tax plan, the 37 per cent tax bracket will be entirely abolished by the year 2024.
However, lower and middle-income earners will start receiving the announced tax relief from July this year itself. Those earning $37,000 a year will pay $200 less in income tax next year.
At least 4.4 million Australians earning between $48,000 and $90,000 will get the maximum benefit of the $530 under the new tax refund plan announced during the Budget.
The refund will be available to middle-income earners as a lump sum on their tax return at the end of the financial year. Those earning up to $90,000 a year will pay a reduced income tax rate of 32.5 per cent as a result of the middle-income earner tax bracket being increased from $87,000.
The government also plans to raise the cap for low-income earners to $41,000 from $37,000 for the 19 per cent tax bracket by 2023.
Associate Prof Harminder Singh from Faculty of Business and Law, Deakin University, says this tax relief is aimed at next year’s federal election.
“There’s no doubt that it’s a political move aimed at next year’s election. The number of lower-income and middle-income earners is the highest whom the government is trying to woo with a little bit of extra money in their pocket.
Prof Singh says even this small relief is good for the economy. He also welcomed the government’s decision not to increase the Medicare levy.
“Any tax that has not been increased should be welcome
