The Importance Of Low Income Tax Rates In Australia

There have been significant changes to the Australian Income tax rates during the period between 2011 and 2016, which both positively and negatively impact, low income earning individuals. Low income earning individuals are defined by the Australian Tax Office as: People who earn less than $66,667 AUD, annually. One of the biggest modifications to the taxation rates was the increase of the Tax-Free threshold. Individuals who earn less than $18,200 AUD a year, are exempt from the income tax, and they do not have to pay it. The threshold has been increased since 2011, with the Tax-Free threshold only encompassing individuals earning less than $6,000 AUD annually. Another change is the increase of the "cents-per-dollar" affecting individuals earning …show more content…
This encourages Australian citizens to borrow money from the banks, and reduce the amount of money deposited into the banks. These factors increase spending within Australia. As a result, the GDP of Australia will increase dramatically. The lower exchange rate will also create a deprecation of the Australian Dollar. This will discourage consumers from purchasing goods and services from overseas. International travel will also become less attractive. This deprivation in the exchange will, however, increase spending and travel within Australia by Australian citizens. International visitors will also see Australia as a better holiday destination due to the exchange rates being in their favour. The decrease in the interest rate of Australia will significantly increase the GDP of Australia, by promoting spending within Australia, and increasing the incentive to …show more content…
This economic stimulus is caused by the government currently in office, in order to increase the popularity and public support of the party. These policy changes can include: taxation cuts, lowered unemployment, lowered interest rates and increased government spending on certain areas. These policy changes can be effective short term, but if used to excess, they can be detrimental to the economy 's long term stability. Accelerating inflation of the dollar, an unsustainably low rate of savings and damage to the foreign trade balance are all examples of the damage caused by the policy changes. In order to prevent these, immediately after the election, politicians would raise the taxes, cut their spending and slow the growth of their money supply, effectively negating the policy changes made before the election. This expansion and contraction of the economy forms an up and down cycle surrounding the election, through the artificial boom and the immediate recovery of the current government in