Country Australians will benefit the least from the multi-billion-dollar stage 3 tax cuts, a new analysis based on tax data has shown.
Think tank The Australia Institute found those most likely to benefit from the tax cuts live in Australian cities, with those living in rural Tasmania expected to see least benefit.
Of the top 20 federal electorates expected to reap the greatest rewards from the tax changes, half are in Sydney and a quarter are in Melbourne.
None are in regional Australia.
Already legislated, the stage 3 changes will abolish the current 37 per cent tax bracket, lower the existing 32.5 per cent bracket to 30 per cent, and raise the threshold for the top tax bracket from $180,001 to $200,001 from next year.
The Australia Institute has publicly lobbied to have the stage 3 tax cuts dropped.
According to the analysis, released today, the stage 3 tax cuts will see the top 20 electorates – including North Sydney, Wentworth, and Warringah — pay $4.8 billion less in tax in 2024-25.
Seven of the top 20 electorates are represented by independent MPs, seven by Labor MPs, four by Greens MPs and two by Liberal MPs.
At the other end of the spectrum, the majority of the 20 federal electorates expected to benefit least from stage 3 tax cuts are in rural Australia.
Of the 20, seven are held by Labor, eight by the Nationals, three by the Liberals and two by independents.
Just one, Blaxland in western Sydney, is considered inner city.
The analysis shows taxpayers in the "bottom 20" electorates will pay $1.1 billion less tax following the introduction of the stage 3 tax cuts.
Table 1: Bottom five to benefit from stage 3 tax cuts
Electorate |
State |
AEC regional classification |
Share of stage 3 |
Party |
|---|---|---|---|---|
Lyons |
TAS |
Rural |
$39 million |
ALP |
Braddon |
TAS |
Rural |
$44 million |
LIB |
Bass |
TAS |
Provincial |
$47 million |
LIB |
Spence |
SA |
Outer metro |
$53 million |
ALP |
Maranoa |
Qld |
Rural |
$53 million |
NAT |
The Tasmanian electorates of Lyons, Braddon and Bass would gain the least from the changes.
According to the Australia Institute, taxpayers in Lyons would pay $39 million per year less tax, compared to taxpayers from North Sydney who would pay $331 million per year less.
It said one per cent of taxpayers in Lyons earned more than $180,000 a year, compared to 14 per cent of taxpayers in North Sydney.
"This data shows the bush and rural electorates will largely miss out on what are effectively tax cuts for rich people in the big smoke," Australia Institute economist Matt Grudnoff said.
Table 2: Top five to benefit from stage 3 tax cuts
Electorate |
State |
AEC regional classification |
Share of stage 3 |
Party |
|---|---|---|---|---|
North Sydney |
NSW |
Inner metro |
$331 million |
IND |
Wentworth |
NSW |
Inner metro |
$319 million |
IND |
Warringah |
NSW |
Inner Metro |
$294 million |
IND |
Curtin |
WA |
Inner Metro |
$286 million |
IND |
Sydney |
NSW |
Inner metro |
$279 million |
ALP |
Mr Grudnoff said the stage 3 tax cuts would benefit around 4 per cent of taxpayers or those who earn $180,000 a year or more.
"There are few things that make the submarine deal look cheap, the stage 3 tax cuts is one of the only things that can," he said.
The changes to the tax rate were introduced and legislated by the former Coalition government.
Before and after last year's election, Labor assured voters an Albanese government would implement the tax cuts as legislated.
The rural electorate expected to benefit most from the tax cuts was Durack in Western Australia, ranked 27th.
The analysis also showed that 55, or 36 per cent of electorates, would receive a higher than average benefit from the stage 3 tax cuts.
Editor’s note 19 April 2023: An earlier version of this story stated the top 20 electorates will pay $48 billion less in tax in 2024-25, based on source material from The Australia Institute. The actual figure is $4.8 billion.
