People earning less than $126,000 a year will face a tax hike from next financial year, and it’s women who will be hit the hardest.
Analysis from the Bankwest Curtin Economics Research Centre, commissioned by The Sydney Morning Herald and The Age, shows that without any changes from the federal government, about 3.4 million people will be $1080 a year worse off, while another 7 million will get less take-home pay.
This tax news comes with the end of the low and middle income tax offset this financial year, that was extended for one year in the 202-21 budget.
Meanwhile, those earning over $250,000 per year will end up paying about $9000 less tax.
Economists from the Bankwest Curtin Economics Research Centre said the end of the tax offset for low and middle income earners will hit women harder than men, as women are the demographic more likely to be earning less than $126,000 a year.
At the start of the recession, it was women who were hit the hardest by job losses, with female-dominated industries the worst affected by the pandemic.
Rebecca Cassells and Alan Duncan said the cumulative increase in income taxes paid by an average woman over the next three years would reach $1506 compared to $1156 for men.
“The withdrawal of the low and middle income tax offset from 2021-22 will disproportionately affect women, who will face an average increase in taxes paid of $502 per year from 2021-22 to 2023-24, relative to 2020-21,” they said, according to the Sydney Morning Herald and The Age.
“For men, the average annual increase in taxes paid will be lower, at around $385 per year.”
The economist said the issue of women being disproportionately affected could be addressed by extending the low-middle income tax offset for the next three years. This would cost at least $21 billion over the three years.
The analysis also suggested that without changes from the federal government, there’s a risk Australia’s economic recovery from the recession could slow.