SA loses out on tax cut windfall

New analysis from the Australia Institute shows that South Australians are amongst those to benefit least from income tax cuts outlined in the 2018 federal budget, compared to the average Australian household.

The figures represent the change in household disposable income (after tax income) as a percentage of change in the national average. Modelling also took into account tax cuts and other budgetary measures announced in the 2018 budget and then averaged out the benefit in dollar terms to each federal electorate.

“While the biggest winners from these income tax cuts are all wealthy inner city electorates in Melbourne and Sydney, the losers are spread across electorates like Mayo,” says Matt Grudnoff Senior Economist at The Australia Institute.

“It’s no surprise that Mayo ranks so poorly. This tax cut is highly selective, so even though Mayo encompasses the affluent Adelaide Hills, the electorate also covers regional areas, which is where we are seeing the least benefit.”

Once the numbers are averaged across the nation, families in Mayo only receive 89 cents for every dollar received by the average household.

Two SA electorates – Wakefield and Port Adelaide – fell into the bottom 10 when ranked against the average benefit received by all other 150 Federal electorates. See figure 2.

“These tax cuts really do flow to the big earners in Australia. In the highest paid electorate, the Prime Minister’s seat of Wentworth, households receive almost double the national average benefit” said Matt Grudnoff, Senior Economist at The Australia Institute.

“The top 10 electorates all get at least one and a half times more than the national average. This is a tax cut that truly delivers for the top-end and leaves everyone else behind.

Figure 1.

Rank

State

Percentage of average

1

WA*

107%

2

NSW

105%

3

VIC

101%

4

QLD

94%

5

SA

90%

6

TAS

80%

 

 

 

 

Figure 2.

 

Rank

Electorate

Percentage of average

Party

1

Adelaide

110%

ALP

2

Sturt

101%

LIB

3

Boothby

100%

LIB

4

Hindmarsh

96%

ALP

5

Mayo

89%

NXT

6

Makin

84%

ALP

7

Grey

79%

LIB

8

Barker

79%

LIB

9

Kingston

78%

ALP

10

Port Adelaide

76%

ALP

11

Wakefield

73%

ALP

Total

South Australia

90%

 

 

 

 

*Source: Australia Institute calculations; Analysis from NATSEM’s STINMOD+ Tax/Transfer model and SpatialMSM18 spatial microsimulation model

Note (*): The WA total is inflated because two of the electorates that are likely to lower the average (O’Connor and Durack) did not pass NATSEM’s validation test.

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