Josh Frydenberg grilled about scrapping of middle income tax relief

Treasurer Josh Frydenberg has sidestepped tough questions about whether low and middle income earners will be worse off next financial year during a tense exchange on ABC TV about the federal budget.

The government extended its Lower and Middle Income Tax Offset (LMITO), a rebate of up to $1080 for singles and $2160 for couples, in Tuesday’s budget, but it will end after the next financial year, cutting the take-home pay for workers in future years.

A person who makes $70,000 in 2021-22 will have an after-tax income of $56,463. Their take-home pay will drop by about $400 in 2024-25 to $56,008 once the offset is removed, according to an analysis by the Bankwest Curtin Economics Centre.

All workers with a pre-tax income of less than $88,000 next financial year will be worse off, too.

Rubbing salt in the wound is the fact stage three of the government’s tax cuts package, which will benefit high income earners, kicks in about the same time in July 2024.

Under the changes, the 37 per cent tax bracket will disappear and 30 per cent tax will apply to all earnings between $45,000 and $200,000.

Earnings over $200,000 will remain taxed at 45 per cent.

Mr Frydenberg was pressed on the tax changes by ABC Insiders host David Speers on Sunday.

“When the LMITO ends, which it will, someone earning $45,000 a year will be $855 a year worse off, someone on $60,000 will be $300 worse off and everyone earning more than $200,000 will be $9000 better off under your tax cuts. Is that correct?” Speers asked.

Mr Frydenberg insisted that was not true.

“The point is someone on $80,000 will be better off, someone on $90,000 will be better off,” the Treasurer said.

“How will they be better off than they are today. Is what you just said correct?” Speers pressed

My Frydenberg fired back, “Absolutely … You are not comparing an apple and an orange.”

Speers interjected, “With respect, I am,” to which Mr Frydenberg snapped, “No you’re not.”