Tuesday, 24 June 2014

Almost 40 days later and Australian voters still not convinced that the Abbott-Hockey-Cormann federal budget is fair

Nielsen Poll of 1,400 voters on 19-20 June 2014 in the Australian Financial Review on 23 June 2014

He also admitted to basing his welfare ‘bill’ per average worker on an average monthly income of $4,800 to $6,500 per person and the projected $140.6 billion welfare spend for the 2014-15 financial year.

So let’s look at the welfare spend and income taxes paid in the last financial year to place this alleged $6,000 cost to workers in perspective.

The 2014-15 Budget Papers show that the Federal Government spent $140 billion on social security and welfare and expects to collect a total of $354.8 billion in tax in the 2013-14 financial year [Statement 5 – Revenue (continued)].

Personal income tax accounted for 63.23 per cent of total taxes collected.

However, as the government estimates it will be paying out $26,800 million in personal income tax refunds, the real total amount of personal income tax retained in treasury coffers will be 55.68 per cent of all taxes collected.

According to the Australian Bureau of Statistics there were an estimated 11.4 million people in paid employment during the 2013-14 financial year and, of these it is likely that around 10.2 million would receive a tax refund.

Approximately 1.1 million of those paying income tax would receive refunds in excess of $6,000. With an est. 477,970 of these taxpayers receiving refunds of $9,999 or over. While the remaining 9.1 million would receive refunds of somewhere between $1 to $5,999. [based on Budget Papers 2011-12 & 2012-13]

These figures indicate that in doing his calculations Mr. Hockey: (i) also assigned incomes to people not in the workforce; (ii) did not take into account the fact that the federal government collects taxes other than income tax; (iii) did not factor in that many workers are/will be receiving tax refunds which cancel out their supposed $6,000 cost in days worked to assist other individuals he classifies as ‘leaners’; and (iv) failed to recognise that some of the “average working" Australians he mentions would also be receiving welfare payments in the form of Family Tax Benefit.

With rubbery figures such as these, created by the old ‘back of an envelope’ method, Hockey seeks to convince voters that his first budget is fair.

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