Life lessons and Stage 3 tax cuts

The Simpsons taught me about tax returns. The lesson I learnt then has me dreading the Stage Three tax cuts. I was eleven years old, and it was Ned Flanders who got my mind racing. The left-handed neighborino was woken by the fireworks that signal the start of both the calendar year and the US financial year.

“Better get going on those taxes, Neddy,” he said to himself before spending his night filling in his income and deductions. He seemed so upbeat about it, unlike Homer, who panicked and wound up being interviewed by the FBI for lodging a late return.

Next to me on the couch was my seven-year-old brother. On our laps sat cold fish fingers and mashed potato. Mum had pulled a casual shift at the gym, literally working her butt off by teaching one-hour aerobics classes. Dad was living elsewhere. Out of necessity, the TV was our babysitter.

When Mum got home, I asked her about whether she had to do what Ned did. She said she had to do a tax return but she didn’t end up paying much tax.

“Why not?” I asked.

Her answer stuck with me: “In Australia, rich people pay more tax so that people like us can pay rent, see a doctor and go to school.”

While I’d never seen our family as poor, this made sense. We’d always gone to the local public school. It didn’t have the latest computers, and the sports equipment was aging, but I liked the teachers, for the most part. Our houses weren’t as snazzy as some of my friends’ places, but at least we had a roof over our heads.

I have a disability that required regular trips to specialists throughout my childhood. I’d already had two major surgeries. They weren’t fun experiences, but at least I could rest easy knowing Mum wasn’t too far out of pocket.

Getting people who earned more money to pay a little bit extra so we could live seemed fair. Whatever trouble we got into, Australia would have our backs.

If we go ahead with Stage Three tax cuts, I’m not so sure anymore.

In one year from today, the changes will raise the threshold for the top bracket of income earners, completely abolish the tax bracket below it and lower the rate on the bracket below that one. It means that everyone earning between $45,000 and $200,000 a year will pay the same tax rate of 30 per cent.

If you’re earning the median Australian income of $65,000, you’ll pay about $500 less tax from July 2024. Hopefully you get a pay rise this year, because that will not come close to covering the increasing costs of everything.

If you’re lucky to be in the top three per cent of income earners, bringing in $200,000 a year, you’ll get the full wad of $9075 in your pocket. So will the top two per cent and the top one per cent.

People like celebrity property investor Adrian Portelli, who appears to have lost track of how many cars and houses he owns, will get an extra $9075 to spend on who knows what. In fact, 80 per cent will go to the top 14 per cent of income earners. These are not people doing it tough. They might have to sell a few assets in these hard times, but they’ll get by.

Then there are all the people earning less than $45,000. The casual and gig economy workers. Those who are looking for work or volunteering. Those who can’t work for health reasons. The single parents who have to leave their kids with a TV dinner to bring in whatever they can just to survive. People who are in the situation my family was in when I was growing up get nothing.

In fact, it’s worse than nothing. The cost of these cuts is more than $240 billion over the next ten years. To put that in perspective, raising the rate of JobSeeker to $958 a fortnight, which was recommended by the government’s own advisory committee, would cost about $75 billion over the same timeframe. The Royal Adelaide Hospital cost around $2.4 billion, and it’s one of the most expensive buildings in the world. We could afford to put 100 of these around the country with the price tag of these cuts.

The Victorian government announced 13 new schools would be built last year at a cost of $581 million. Why not go all-out and build 500 new schools, with money left over to give every teacher in the country a pay rise of $3500 a year? I’m not saying the government should do all of this, although perhaps it should consider this sort of big thinking.

But as Treasurer Jim Chalmers and Social Services Minister Amanda Rishworth said – in a statement regarding their own advisory committee’s report that recommended an increase to JobSeeker – ‘we can’t fund every good idea’. The Minister for Women, Katy Gallagher, has echoed her colleagues’ views, saying, ‘I wish I could fund every good idea.’ I hope it’s not lost on these ministers that the Stage Three cuts will benefit men twice as much as women.

The problem is we’re not talking about good ideas. We’re talking about living. We’re talking about scraping through.

I think back to Mum’s answer to me as an eleven-year-old. In Australia, rich people pay more tax because it’s the fair thing to do. I also think about the journey that eleven-year-old was on, trying to negotiate the world with the assistance of taxpayer-funded safety nets. These are safeguards relied upon by millions of everyday Australians, not in the hope of a free ride, but on the idea of a fair go.

Government might not be able to fund every good idea, but it can drastically reduce its choices by giving the wealthiest people in our community tax cuts. So today, as someone fortunate enough to pay taxes, I will be channelling my inner Ned Flanders.

My partner will probably have to hold me back from clicking ‘lodge’ on MyGov until there’s been enough time for all my deduction receipts to come through. But when I finally click that ‘submit’ button, I will proudly be contributing my share in the knowledge that someone who relies on government services to survive will be able to face another day.

My worry is that these same people won’t be able to do so next year if Stage Three goes ahead.

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