National Party seats would be largest beneficiaries Low-Income Tax Offset reform: new research

Proposed reforms to the Low-Income Tax Offset (LITO) would greatly benefit rural and regional electorates, particularly those currently held by the National Party, according to new research from the Australia Institute.

The LITO is an automatic tax refund — currently capped at $700 per year — which low-income earners receive when they lodge their tax returns.

The research shows that increasing the cap to $3000 would ensure Australia’s lowest-income earners stay ahead of inflation, while those earning between $32,000 and $46,000 would receive a tax cut of more than $2,000 per year.

“The big winners would be regional electorates, which have the most low-income earners and, therefore, the most to gain,” said Dr Richard Denniss, co-chief executive of The Australia Institute.

“Battlers in regional New South Wales, Queensland and Victoria are likely to be really important in coming elections, and this proposal would provide real benefit to those electorates,” he said.

The analysis shows that the changes could easily be paid for by a 25 per cent tax on gas exports, an idea proposed by the Australian Council of Trade Unions and supported by voters across party lines.

The polling, conducted by RedBridge, revealed particularly strong support among One Nation and Greens voters.

Yesterday, One Nation announced a policy to charge the gas industry royalties, while independent Senator David Pocock this week threw his support behind a 25 per cent gas export tax.

The 25 per cent gas export tax was also publicly supported by Australian Greens Leader Larissa Waters in her address at the Australia Institute’s Revenue Summit in Canberra last year.

“This problem is easy to fix: targeted tax breaks for low-income earners paid for by ending the giveaway of Australia’s gas resources to multinational exporters,” said Dr Denniss.

“This is the engine room of the cost-of-living crisis – the current tax settings mean that Australian families on low incomes are not keeping up with cost of living price rises.”

Dr Denniss highlighted that it would be a easy decision for the Government to make, given widespread support across party lines.

“The economics is easy, the politics is easier still,” Dr Denniss said.

“It is clear the Federal Government is increasingly out of step with voters when it comes to taking on the gas industry.

“Australians have clearly had enough of our governments giving our gas resources away for free and failing to tax the gas industry properly.”

With the support of the Greens and Senator David Pocock, Labor would have the numbers to pass these reforms in the Senate.