Modelling of the 2018-19 Federal Budget Personal Income Tax Measures

Authors: Associate Professor Ben Phillips, Richard Webster, Professor Matthew Gray, ANU Centre for Social Research and Methods (CRSM)


The Federal Budget for 2018-19 contains a number of changes to the personal income taxation system for Australia. The changes are in two stages. The first stage consists of modest tax cuts provided in 2018-19 that are directed towards low and middle income earners. The second stage are more significant tax cuts that are directed more towards middle and higher income earners. The Government’s rationale for the tax cuts are that they are “… providing tax relief to encourage and reward working Australians ….. to make personal income tax in Australia lower, simpler and fairer” and that “the plan involves: immediate relief for low and middle-income earners; helping to protect Australians’ earnings from bracket creep; and ensuring more Australians pay less tax by making personal taxes simpler and flatter.” (Commonwealth of Australia 2018: 1-2) This paper considers the distributional and fiscal consequences of the tax changes proposed in the 2018-19 Federal Budget over the period 2018-19 to 2027-28. We consider which household types gain the most and whether or not the tax cuts are sufficient to overcome bracket creep.

The research note is available here.


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