Explore the proposed Australian Stage 3 Tax Cuts.

PART B: THE PROPOSED AUSTRALIAN STAGE 3 TAX CUTS STUDENT'S NAME STRUCTURE AND PURPOSE OF THE TAX SYSTEM Taxes are the state's primary revenue source in almost every nation, and Australia is no exception. Today's global taxation practices demonstrate significant variations between countries, particularly industrialized and developing nations. Advanced economies, in particular, tend to impose higher taxes as a proportion of their gross domestic product than developing nations. Often, these taxes are collected via income taxation. In contrast, trade and consumption taxes are more important in developing countries. The tax reduction matter, especially that around Stage 3 Tax Cuts, has been widely covered by the media in Australia. To ascertain if the advantages of moving forward with the anticipated Australian "Stage 3 Tax Cuts" exceed the disadvantages, this paper critically evaluates the advantages and disadvantages. It offers my perspective on the subject matter.[Jialu L Streeter, ‘How Do Tax Policies Affect Individuals and Businesses? | Stanford Institute for Economic Policy Research (SIEPR)’, siepr.stanford.edu (October 2022)] [Emma Dawson, ‘The Stage-Three Tax Cuts Are Politics over Policy – and No Way to Save Our Struggling Economy’, The Guardian (online, 9 January 2024)] Australia employs a progressive tax system, wherein those with higher incomes are subject to a higher tax burden. Australia's tax structure comprises 125 different types of taxes. Among the various taxes are capital gains, income tax, taxes on fringe benefits, and taxes on goods and services. Everyone is treated equally under the Australian tax system, regardless of income level. Several organizations inside the tax system ensure equity is upheld for the good of the general population. The citizens gain from the system tax structure as it allows them to access subsidized government facilities. The constitution grants the Commonwealth, a body inside the system, the authority to issue taxes. Sections 51(ii) and 51(iii) grant the commonwealth the authority to establish and enforce tax regulations. The Australian Constitution grants three taxing powers: state taxes, income tax, and customs and excision authority. Payroll tax, land tax, and stamp duty are examples of state taxes.[TTPI, What Is a Progressive Tax (and Transfer) System?, Tax Fact #20 (2021) 1] AUSTRALIAN STAGE 3 TAX CUTS Australia's "stage 3 tax cuts" constitute the final stage of the extensively discussed tax reform initially announced and implemented by the Federal Government in 2018. The redesigned version of the Stage 3 tax cuts has been officially enacted and will take effect on 1 July 2024, following the announcement of recent modifications. The anticipated Stage 3 Tax Cuts seek to modify the existing income tax system by reducing tax rates for specific income brackets. The proposed changes entail a reduction in the tax rate of 19 percent for individuals with incomes up to $45,000 to 16 percent. For those earning between $135,000 and $190,000, the tax rate will be 37 percent, the previous rate. Lastly, for earners above $200,000, the tax cut will be halved. These changes aim to reduce the financial burden on persons earning low or moderate incomes while also spreading the responsibility for paying taxes.[Prashant Mehra, ‘Stage Three Tax Cuts: How Much Will You Receive?’, Forbes Advisor Australia (28 February 2024).] [Phillip Coorey and Tom McIlroy, ‘Tax Cut for Top Earners Halved under Stage Three Changes’, Australian Financial Review (23 January 2024).] BENEFITS AND DETRIMENTS OF ADOPTING THE REDESIGNED AUSTRALIAN "STAGE 3 TAX CUTS" FOR AUSTRALIAN TAXPAYERS Benefits The redesigned Tax Cuts include various benefits for individuals, households, and the economy. Low- and middle-income families have been significantly impacted by unexpected cost-of-living increases related to cost increases. It is challenging to assist these households without contributing to inflationary pressures and exacerbating cost-of-living issues. The proposed "stage 3 tax cuts" aim to offer cost-of-living relief to around 13.6 million citizens, a significant increase from the present statutory tax reduction that only benefits 10.8 million citizens based on 2023-24 levels. The approach is mainly balanced in terms of revenue and is unlikely to affect expectations of inflation. The goal of these tax reductions is to offer essential relief to persons with moderate as well as lower incomes. The proposed reductions, which include cutting ...