Successive governments have made large changes in taxation and spending measures that have disproportionately affected women. Men have benefitted most from tax cuts while the cuts to services have primarily impacted on women – a double disadvantage.
Before the Global Financial Crisis, income tax cuts were a key feature of fiscal policy for successive Federal Governments. These tax cuts cost the Budget $169 billion from 2005 to 2012. This fall in revenue has created what the current Government refers to as a ‘budget emergency’ and has been used as the basis for severe budget cuts to social services.
60 per cent of the income tax cuts flowed to the top 20 per cent of income earners, who are predominately men. Because women earn less on average than men do, women received only 32 per cent of the benefits of these tax cuts.
Because of their lower incomes, women are more likely to benefit from the delivery of government services. We estimate that 55 per cent of the budgeted cuts to services are borne by women.
By considering the ongoing structural disparities between men and women in the home and workforce, the Government could make far better informed decisions about how it taxes and how it provides services. Existing gender inequality is being further entrenched as Australian women are receiving less benefit from tax cuts and shouldering more of the costs of service cuts. Changing these policies could leave women billions of dollars better off.
While the Government may believe that cutting marginal income tax rates will help significantly in lifting workforce participation rates that could then lift long term economic growth, evidence shows that this is not a key motivating factor for workers, particularly not for women. Access to affordable high quality child care is likely to be more effective.
Gender inequality does not appear to be an issue of high priority for the current Federal Government and their budget shows it.