Sunday, July 10, 2011

Tax Changes as Part of Climate Package

The government announced its climate policy package today. It's expected to get through parliament. The carbon price will apply to only the biggest 500 companies by emissions but they'll pass on the costs to a large extent to consumers. There are also tax cuts as part of the package including tripling the tax free threshold to over $18k a year. If we multiply that increase by the 16.5% lower tax bracket that is a tax cut of $2,000 per year. But media reports are saying the cut is much smaller than that - $600 for people earning $20k p.a. and zero for people earning more than $80k per year. So apparently there are some other changes which haven't been discussed. I guess the low income tax offset will be abolished and that might explain the $600 number. But something else must increase to remove the benefits from higher income households.

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