Business pain, family gain
Illustration: Andrew Dyson
BILLIONS of dollars will be siphoned from businesses and the wealthy into the pockets of families with children, with tax cuts, increased payments and lump-sum cash bonuses to tackle cost of living pressures.
From July 1 this year, taxpayers on annual incomes of $70,000 will get an extra $6.79 in weekly take-home pay, with the tax-free threshold set to more than triple from $6000 to $18,200, and the flood levy set to expire.
The tripling of the threshold will benefit all taxpayers earning up to $80,000 a year. But the end of the levy — set at 0.5 per cent for annual earnings between $50,000 and $100,000 and 1 per cent for earnings above $100,000 to meet the cost of last year's floods — will benefit all taxpayers. That means a person earning $250,000 a year will get an extra $33.71 a week, or $1753 a year extra take home pay.
In a further win for families, from July 1, 2013 family tax benefit part A will be lifted, costing the budget $1.8 million over four years. Families with one child on the maximum rate will get an extra $300 annually, while those with two or more children will get an extra $600.
Treasurer Wayne Swan said more than 1.5 million families would benefit, with nearly half taking home an extra $600 a year.
In an apparent effort to further soften the impact of the carbon tax, the government will also spend $1.1 billion on a new "Supplementary Allowance" for low income earners on welfare payments, including Newstart, Youth Allowance and Parenting Payment recipients.
Under the changes, costing $1.1 billion over four years, singles will get a yearly allowance of $210, while couples will get an extra $350, paid in two yearly instalments from March next year. The government will also spend an extra $2.1 billion over five years on a new "Schoolkids" bonus, which will replace the problematic education tax rebate. From 2013, eligible families will automatically get a cash payment of $410 for primary school students and $820 for secondary school students, paid in two equal instalments in January and July each year.
Mr Swan said last financial year about 774,000 families failed to fully claim their education tax rebate entitlements in their tax return because they failed to keep records, while a further 284,000 families failed to claim anything. About 1.3 million families are expected to receive the bonus, which is designed to help families with education expenses.
But the budget papers also revealed the federal government's total tax haul is expected to rise from 22.1 per cent of GDP in 2012-13, to 22.9 per cent in 2015-16.
By historical standards, that would still be relatively modest, with the total tax take peaking at 24.2 per cent of GDP in 2004-05 during the Howard years.
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