ns are set to receive their long-awaited tax cuts – as minimum wage workers get a pay rise and everyone gets electricity bill relief.
July 1 signals not just the start of the new financial year but also the debut of Labor’s revised Stage Three tax cuts and a series of measures to help with the cost-of-living crisis.
Treasurer Jim Chalmers insists these goodies won’t aggravate ‘s inflation crisis or spark another interest rate rise, amid fears the Reserve Bank could inflict more pain in August.
‘The tax cuts which will flow to every taxpayer from Monday are within the same envelope that was already factored in, to the Reserve Bank and the Treasury’s forecasts,’ Dr Chalmers said on Friday.
‘We’ve also ensured that when it comes to energy bill relief and cheaper medicines and Commonwealth rent assistance, these are designed to put downward pressure not upward pressure on prices.’
Here’s what you need to know about the cash splash.
Stage Three tax cuts
‘s 13.6million taxpayers are getting relief on July 1 but Labor’s revisions to the former Coalition’s government’s stage three tax cuts will see more sweeteners for lower and middle-income earners.
Part-time workers earning $45,000 a year – or less than new the full-time minimum wage of $47,627 – are getting back $805 a year instead of nothing.
Those on $80,000 – slightly more than the average wage of $74,500 – get back $1,679 instead of $875.
Labor has kept the 37 per cent tax bracket for those earning between $135,000 and $190,000.
Meanwhile, the 45 per cent tax bracket will kick in at $190,000 instead of $200,000.
That means high-income earners on $2000,000 get back $4,529 instead of the original $9,075.
Minimum wage increase
‘s 2.7million lowest-paid workers are receiving a 3.75 per cent boost on Monday, that will increase their hourly pay by $24.10 and take their weekly wage to $915.90.
Such minimum wage increases are often replicated in national awards but the pay bump will be lower than May’s 4 per cent inflation rate – meaning they will be suffering a cut in real wages.
Westpac senior economist Justin Smirk said the increase would be unlikely to spark an interest rate rise because the Fair Work Commission only awarded a low increase.
‘The RBA would be comforted by the decision,’ he said.
‘Not only did the FWC note that they considered the rising cost of living for the workers affected by the decision, but they also took into account the rejigged stage three tax cut and broader cost of living relief those workers will be receiving from July 1.’
Electricity rebates
Everyone regardless of their income is will be receiving $300 electricity rebates from July 1, in four quarterly instalments of $75.
This rebate only lasts a year, stirring concerns inflation will rise again once it ends in June 2025 – or even fail to bring down inflation as promised.
Unlike a previous $500 rebate for seniors and healthcare card holders, this $300 rebate – costing the Budget $3.5billion – won’t be means tested.
Prime Minister Anthony Albanese promised at the last election to slash average annual electricity bills by $275 by 2025.
But in the year to May, electricity bills climbed by 6.5 per cent – a level above inflation.
The Reserve Bank left interest rates on hold this month at a 12-year high of 4.35 per cent but in the accompanying statement, it endorsed the electricity rebate as a form of government spending that won’t add to inflation.
‘Recent budget outcomes may also have an impact on demand, although federal and state energy rebates will temporarily reduce headline inflation,’ it said.
‘The persistence of services price inflation is a key uncertainty.’
Commonwealth rent assistance
While Dr Chalmers talked about the 10 per cent boost to Commonwealth rent assistance, this measure doesn’t kick in until September 20.
Vapes
Non-nicotine vapes will no longer be available for sale outside pharmacies with users now needing a doctor’s prescription.