Redesigning Family Tax to Benefit Low Income Households
The total approximate savings from scrapping both the FTB Part B and the Schoolkids Bonus would be $5.9 billion each year. Therefore, the abolishment of Family Tax Benefit (FTB) Part B and the Schoolkids Bonus, while redesigning Family Tax Benefit Part A to reduce middle-class welfare and insulate low-income families from the former. The plan puts forth a revaluation for Australia’s hostile tax system toward single income families and stay-at-home parents.
Components of this proposal will include such measures to ensure people are getting the right help – through better assessment and targeting income support, and providing appropriate assistance to low-income households and stay-at-home parents. The following policy proposal will detail key arguments and steps in favour of redesigning family benefits to direct funds to low income households:
Reform of the Family Tax Benefit comes as the number one item in the Emergency Budget Repair Kit, which works to minimise the impact of wasteful government spending that is currently exceeding $500 billion, for an annual saving $5.9 billion. In this section key recommendations include: abolishment of FTB Part B and the Schoolkids Bonus, while the redesigning of FTB Part A to reduce middle-income welfare and redirect to low-income households from the former.
- Reform Family Tax Benefit Part A
While, families entitled o FTB Part B are also eligible for FTB A that includes a per fortnightly payment of up to $224 alongside FTB Part A. Currently, 94% were also receiving Part A. That is why the second step toward FTB reform would be to redesign the FTB Part A alongside the proposed changes. To prevent low-income families being worse-off and would ease financial costs. While, at the same time redirecting the unacceptable amount of tax going toward those with an income level above the median to those low-income families in genuine need of support. It is only logical as FTB Part A cost the taxpayers $14.3 billion in 2012-13. At the same time families that receive FTB Part B face high effective marginal tax rates caused by the cumulative withdrawal of both payments at certain income levels.
While, under the current FTB Part A, a family can have a combined income of $234,860, before the entire benefit is withdrawn. If this had a cut off at a uniform household income level (as the median $64,168), regardless of the number or age of children, it would ensure financial security fairly and stop billions of dollars going to families who do not need to claim expenses.
- Abolish Family Tax Benefit Part B
Firstly, an abolishment of FTB Part B saves $4.5 billion that makes for a majority reduction toward the Emergency Budget Repair Kit. Placing Part B as the most wasteful and unnecessary policy within the range of family tax benefits. FTB Part B alone allows for those earning over $150,000 per year to be receiving payments of more than $4,409.20. While, it is both payable to families where the primary earner makes $150,000 per year and the secondary earner makes up to $20,532-$26,390 a year. To abolish FTB Part B would work directly to reduce welfare to middle-class groups, while preventing the alternative resort to tax increases or more debt that will places greater pressure on household budgets creating such a deadweight loss.
To put this into perspective, the gross income of the median Australian household in 2011 was $64,168. Forcing a proportion of low income taxpayers to fund those with above average incomes. Basically, one can earn $112,222 more than the average worker, while receiving a per fortnightly payment of $102.20-$146.444.
- Abolish Schoolkids Bonus
Further savings can be gained from abolishing the Schoolkids Bonus, which ballooned to $1.4 billion in its first year 2012-13. As such in 2013-14, parents of children in primary school will receive two payments of $205 per child, while secondary school children are eligible for up to $410 per child.
As the Australian government spends billions on classroom teaching, with little to show for investments. Australia should be doing more for parents who stay at home to raise and care for their children. However, present policy results in quite the contrary as presented below in the case showing disparities for those single income households compared to double income households. This shows little help and does not provide the freedom for families that want to look after their own children. As economic statistics may not merit what they do as important, it is vital the proposal go forward, in order to help such single-income households, impacting upon voluntary employees to stay-at-home parents.
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