Brotherhood supports additional tax breaks for low income earners

27 January 2009

The Brotherhood of St Laurence today came out in support of measures proposed by the Australian Industry Group to the extent that they ease the tax burden for low income Australians.

“The Brotherhood fully supports the AIG’s proposal to bring forward the proposed increase to the Low Income Tax Offset. The tax benefit of the LITO for low income Australians would increase from $1200 to $1500,” said Tony Nicholson, Executive Director of the Brotherhood.

Targeted assistance for low income earners would provide much needed stimulus to the economy, he said.

“We know that groups at the bottom of the income ladder are more likely to spend any additional income as, on average, they have less debt and more immediate needs. Their spending will provide a much-needed stimulus to the economy,” Mr Nicholson said.

“Previous research on consumer debt found that that three quarters of households with people in the lowest income quintile reported having no consumer debt, so with extra funds they are more likely to spend money on goods and services than pay off debt.”

However the Brotherhood said that more needed to be done to assist people who become unemployed as a result of the downturn – with a strong focus on job creation and ensuring that unemployment benefits are adequate.

“At the moment the Newstart Allowance for a single person is $50 a week less than the age pension payment - clearly this is not sufficient to assist job seekers overcome barriers to work, such as retraining, while also avoiding financial hardship. The Brotherhood supports the calls by the Australian Council of Social Service for increases to the Newstart Allowance of $30 a week.” Mr Nicholson said.

In addition, he said, the Brotherhood also urged to Federal Government to make a much greater investment in job creation projects.

“Keeping people employed in times of downturn has the added benefit of ensuring that skills are retained in the workforce so that any improvement in economic conditions is not delayed by lack of skills,” he said.

“For example, a Brotherhood-KPMG research project found last year that a program funded by government to retrofit low-income households to better deal with the effects of climate change and the Carbon Pollution Reduction Scheme could create up to 40,000 new jobs,” he said.