Carbon tax marks biggest overhaul since the GST
HOUSEHOLDS and businesses face the biggest tax shake-up in more than a decade in just over a week, as the carbon price and major changes to tax rates and family payments take effect.
HOUSEHOLDS and businesses face the biggest tax shake-up in more than a decade in just over a week, as the carbon price and major changes to tax rates and family payments take effect.And unlike the back-to-back tax cuts of the Howard years, the upcoming changes will overwhelmingly benefit low and middle income earners while taxing higher income households more.Under compensation for the carbon tax, everyone earning less than $80,000 a year will receive a tax cut.For someone with an annual salary of $65,000 the tax saving is worth $303 a year. People earning $25,000 or less will receive the biggest tax cuts, of between $500 and $600 a year.Households receiving Family Tax Benefit Part A will get extra support, while pensioners, students and some families have recently received increased cash payments.People earning more than $80,000 will not receive any income tax cuts, though everyone who earns more than $50,000 will no longer pay the temporary flood levy.Tax increases on superannuation will target higher income earners, while people earning less than $37,000 will effectively pay no tax on compulsory super contributions.In health care, private health insurance subsidies for individuals earning more than $84,000 will be cut. The Medicare levy surcharge will rise for people who don't take out private health insurance.Tax experts said the changes represented the most significant overhaul in tax since the GST was introduced in 2000.The general manager of policy at the Institute of Chartered Accountants, Yasser El-Ansary, said a carbon price and associated changes would indirectly affect every taxpayer."I would say this is the biggest agenda of tax change for both individuals and businesses since the GST was introduced," Mr El-Ansary said."Call it whatever you like, in the end a carbon price or a carbon tax represents a major broadening of our indirect tax base," he said.A partner at the accounting firm Pitcher Partners, Scott Treatt, said the changes redistributed income from high to low income earners more than previous Labor budgets and the tax cuts of last decade under the Howard government."This budget brought about tax cuts which didn't benefit the higher income earners not that you can really call someone earning $80,000 a year in the Australian economy a high income earner and gave the benefits solely to those earning less than that amount," he said.The chief executive of the Australian Council of Social Service, Cassandra Goldie, said the changes ensured people who needed support were the ones receiving benefits or tax cuts. But, Dr Goldie expressed concern the compensation for people on the Newstart allowance was too low. "Dollar for dollar they will get less than people who are on the pension. But in fact their spending requirements are the same," Dr Goldie said.The 1st of July marks the starting date for major tax changes.