Saxon Davidson The Spectator Australia 26 April 2023
While Australians were ensconced in the Easter long weekend, the Albanese government announced that would not be extending the low- and middle-income tax offset (LMITO) in the upcoming budget. LMITO was stage one in a three-phase tax reduction plan legislated by the previous government. This revelation should not come as a surprise as the current policy agenda of the federal government is making the livelihoods of mainstream Australians more difficult. Everything from tax policy, red tape, and immigration to energy policy is making life harder for mainstream Australians.
This tax rise could not come at a worse time for Australian families struggling with the crippling cost-of-living crisis, a housing crisis, and inflation all contributing to a lowering of our standard of living. Analysis aired by Channel Nine revealed that the LMITO tax hike will take up to $1,500 from the back pockets of lower- and middle-income Australians.
It also follows the federal government abandonment of a promise to reduce household energy bills by $275 a year.
While considering energy, research by the Institute of Public Affairs previously found that the emission reduction policies pursued by the federal government will prevent the creation of approximately half a million jobs, the majority of which being in regional Australia.
Worse still, Australian households can expect retail electricity prices to double by the end of the decade due to the implementation of these policies.
Increasing household electricity prices have been accompanied by a shortage of houses themselves, which has driven an increase in their purchase value. This shortage is set to exacerbate with the recent announcement that there will be an increase in immigration of over 650,000 people over the next two years.
The federal government have justified this massive increase in immigration because of the unprecedented worker shortages in Australia. Yet, in a rush to open the front gate to new arrivals, absolutely no consideration has been given to what is going on in our own backyard.
IPA research has found this worker shortage could be alleviated by reducing red tape faced by pensioners, veterans, and students who wish to enter the labour force but cannot because of prohibitive tax and social security penalties.
This red tape is costing Australia $32 billion in forgone wages alone, all of which could be going into the back pocket of Australians.
Instead of increasing taxes on Australians who are already working, the government should increase the amount of Australians working and paying tax.
While it has been argued by some economists that the abolishment of the LMITO is a good idea as it would sure up the budget bottom line, this argument falls flat considering the Albanese government is being cajoled into bailing out the fiscally irresponsible Andrews government. A move that will only increase inflationary pressures.
Increasing taxes on the lower and middle classes is not the solution to budget constraints, especially during a cost-of-living crisis.
This tax increase is a hammer blow to the livelihoods of 10 million hard-working Australians, and should be a wake-up call to the rest of the population, with stage three tax cuts to people earning between $45,000 and $200,000 potentially next in line.
The political class must realign their values and promote policies that help lower- and middle-income Australians. Fixing the budget, providing reliable energy, and ensuring Australians keep more of their own money should all be mission-critical for the government and the opposition.
This can be achieved by reversing the emission reduction policies pursued by the Albanese government, lowering taxes on mainstream Australians, and reducing red tape in the labour market to allow more Australians to work.
Everyday Australians need a way out of the crises that are crippling our way of life, failing that then there is a very real risk then this cost-of-living crisis could very much become the norm.
Saxon Davidson is a Research Fellow at the Institute of Public Affairs