Self-funded retirees are set to be among those who gain the most from the combined effects of the federal government’s tax changes and carbon compensation package.
From today all Labor MPs including the Prime Minister, Julia Gillard, and her cabinet will start selling the carbon price to a public that is already deeply concerned about its impact on the cost of living.
”Tony Abbott and the Liberals will hit you in the hip pocket by clawing back all of this new financial support and tax cuts, so he can give a huge tax cut to his billionaire mates instead,” the Federal Treasurer, Wayne Swan, said.
Mr Swan’s comments are indicative of the offensive the government will go on over the winter break as MPs spend six weeks in their electorates away from Parliament.
Modelling conducted by the Treasury shows that the combined effects of the compensation package, the increase in the tax-free threshold and the seniors’ tax offset will result in self-funded retirees, people who are not solely reliant on the aged pension, receiving three times as much government assistance as the expected price increase from the carbon price.
From today, 40,000 people aged 65 and over will no longer pay tax as a result of the increase to the tax-free threshold. A further 190,000 will receive tax cuts of at least $303 a year and 370,000 people will receive smaller tax cuts.
The government is determined to insulate most people from the effects of the carbon price on their overall cost of living. Nine out of 10 households will receive some kind of financial assistance and almost 6 million households will get assistance that either meets all or exceeds the expected price rises.
The government has been shadow boxing with the Coalition about what the carbon price will mean, but from today both sides will have to engage with voters and their experiences of how the price is affecting them.
The policy is particularly difficult for Ms Gillard who has spent months telling nervous Labor MPs the opinion polls will start to shift once people face the reality of the carbon price.
Despite a drift away in support among MPs in the past fortnight, Ms Gillard maintains the government must be given the opportunity to sell the carbon price.
Mr Swan said the assistance package would mean ”seniors can make ends meet [and] deliver an important extra buffer which provides extra financial security”.
”Almost every single pensioner will get compensation over and above the cost impacts, as well as a buffer of 20 per cent,” he said.
The opposition has promised to maintain the tax cuts although it has not said how it would afford to keep them once it scraps the carbon price.
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