Tax offsets for low and middle incomes: Australians react to $1080 cash payout

Tax compensation giving millions of Australians an extra $1,080 could be extended. But some Australians think it’s just a ploy to win votes.

Australians have responded with discernment to suggestions that the Low to Middle Income Tax Offset (LMITO) could be extended in the next budget.

“Desperately trying to buy votes,” said one.

“I love it when the government bribes me with my own money,” another commented acidly.

The LMITO, as the name suggests, is tax compensation for people who earn up to $126,000 per year. It was originally billed as temporary compensation first introduced by Prime Minister Scott Morrison as Treasurer in 2018, his last budget before the spill that won him the keys to the Lodge. It reduces a worker’s annual tax bill by up to $1,080 per year.

It was extended to operate for the two pandemic years, given the recession and spike in unemployment it induced.

By operating alongside the government’s tranche of tax cuts, low- to middle-income earners have, as it were, received two cuts in their tax bill instead of just one.

Economist Peter Martin, writing in The conversationargued that it was time the “unnecessary” tax relief was eliminated.

Martin said LMITO was “incredibly ill-conceived, introduced for a purpose that no longer exists, expanded for a purpose that didn’t make sense, and can no longer be abolished without giving people a ‘pay cut’.” “.

“Frydenberg’s problem is that now that he has given us both compensation and stage two together, and has done so for two years, the end of compensation will rightly be seen as a raise. tax cuts or a ‘wage cut,’ directed at low and lower middle incomes,” he wrote.

The LMITO is due to expire again this year. The Prime Minister did not rule out an extension of the compensation in November in an interview with the herald sun.

“We have a very strong track record when it comes to tax cuts.

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Mr Morrison is said to fear a political backlash if his government does not extend the lag. At a time when Australians are feeling the pinch of rising prices and a looming rate hike, voters are unlikely to relish the prospect of having their tax return reduced by as much as $1,080 from this to what they were used to over the past three years.

As the Prime Minister struggles in the polls against Labor leader Anthony Albanese, some voters say extending the tax cut is just a way to win votes.

“This is an exercise in vote buying no more no less,” one wrote.

“It’s called the ‘try to buy your vote’ payment,” another remarked.

Commentators have also expressed concern about the uneven distribution of LMITO, saying middle-income workers are not those most in need of the extra money.

“Only those with high incomes come close. How much did you actually get the last time they bought an election for pennies? Your money.

“So the workers will get $1080 and those on a pension will get a paltry $20,” one wrote, referring to this month’s Social Security indexation which saw the pension increase by 20.10 dollars per fortnight for the average single pensioner and 13.20 dollars per fortnight for the sole employment. applicant with no dependants.

Details on if and how the compensation will be extended are expected in the budget, which will be released on March 29.