Suburbs that’ll be worse off from tax cuts
IT'S a tax cut which would divide Sydney as it would the nation.
That's the finding of one analysis of the Government's proposed three-stage income tax reductions.
Western Sydney would get a below-average share of the income taxpayers would get to keep, according to the analysis commissioned by the Australia Institute.
Eastern and northern Sydney would get an above average share, reported the author of the analysis, the National Centre for Social and Economic Modelling (NATSEM).
The study found the biggest fiscal windfall would be enjoyed by high earners in the seat of Wentworth, held by Prime Minister Malcolm Turnbull.
Those taxpayers would get almost twice the average benefit gained by taxpayers.
Nationally, the top 10 electorates all get at least one and a half times more than the national average.
"This is a tax cut that truly delivers for the top-end and leaves everyone else behind," said the Australia Institute.
"By political party, it is clear the least benefit flows to National Party seats. One quarter of Nationals' seats are in the bottom 10 electorates, and all but one of their seats are ranked in the bottom half of electorates."
And two of the seats said to be below-average beneficiaries of proposed cuts are Longman in Queensland and Braddon in Tasmania, where by-elections will be held next month.
Of the Sydney federal electorates which would benefit the most, the top three are in the city's eastern and northern suburbs, and are held by Liberals - Wentworth, North Sydney, Warringah.
Labor-held inner-city seats of Sydney and Grayndler ranked four and six.
The three electorates with the lowest benefits - with a below-average gain from the proposed cuts - are in the west, according to the Australia Institute examination of the Government scheme.
The are Chifley, Watson, and right at the bottom Blaxland. All are Labor seats.
"This tax cut is highly selective. It mostly benefits high income areas and wealthy inner-city electorates," said Matt Grudnoff, senior economist at The Australia Institute.
"While the biggest winners are all wealthy inner-city electorates in Melbourne and Sydney, the losers are spread across the country and are a mix of both regional and city electorates."
The institute recommended the Government's tax legislation be split to preserve the benefits for low and middle income earners but reduce or eliminate gains for those on top incomes.
Treasurer Scott Morrison has dismissed criticism as "the higher tax club … throwing shoes at our personal tax policy".
Mr Turnbull has brand it the most comprehensive reform of personal tax in a generation.
He argues it would mean 94 per cent of Australians not having to pay more than 32.5 cents in any extra dollar they earn.
He says by 2024 the marginal tax rate would go to 32.5 cents in the dollar until incomes reached $200,00.
"I'll tell you another thing: it's also very fair," Mr Turnbull told reporters yesterday.
"Because in fact, even though the 45 cents threshold is going to be pushed up to $200,000 from $180,000, you will have, actually, a larger share of the personal income tax take overall, being paid by people in that 45 cent bracket.
"So the proposition that it's unfair to people on lower incomes and middle incomes that Labor has made, that is a complete lie."
The Australia Institute said the analysis by NATSEM looked at the average change in disposable household income compared to the average change for the whole of Australia in 2024-25, which is the first year the income tax cuts would be fully implemented.
It said the income tax cuts were estimated to cost the Budget $13.4 billion over four years and $144 billion over 10 years.
TOP 10 ELECTORATES
Wentworth, NSW (Liberal) - 192% average
North Sydney, NSW (Liberal) - 180% advantage
Warringah, NSW (Liberal) - 172% advantage
Sydney, NSW (Labor) 167% advantage
Melbourne Ports, Vic (Labor) 160% advantage
Higgins, Vic (Liberal) 159% advantage
Bradfield, NSW (Liberal) 158% advantage
Kooyong, Vic (Liberal) 154% advantage
Grayndler, NSW (Labor) 154% advantage
Goldstein, Vic (Liberal) 150% advantage
BOTTOM 10 ELECTORATES
Longman, Queensland (Labor) 77% advantage
Cowper, NSW (Nationals) 77% advantage
Port Adelaide, SA (Labor) - 76% advantage
Lyne, NSW (Nationals) - 76% advantage
Wide Beach, Queensland (Nationals) - 76% advantage
Wakefield, SA (Labor) - 73% advantage
Braddon, Tasmania (Labor) 72% advantage
Lyons, Tasmania (Labor) - 72% advantage
Hinkler, Queensland (Nationals) 71% advantage
Blaxland, NSW (Labor) - 70% advantage