This article is more than 3 years old

This article is more than 3 years old

A new analysis of the combined impact of the Turnbull government’s budget measures suggests women earning below-average wages could be hit with effective marginal tax rates of 100%.

A study of budget initiatives by the National Foundation for Australian Women, to be released on Monday, says a combination of an increase in the Medicare levy, the freezing of family tax benefit rates and earlier repayment requirements for student loans “are particularly harsh for women”.

The study notes the proposed increase in the Medicare levy will affect women on incomes greater than $21,644 and, for women who are eligible to receive family tax benefit part A, the rates are frozen for two years.

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“Those who pay childcare fees will continue to face high effective marginal tax rates,” the report says. “University graduates will start repaying loans when they reach income levels of $42,000 per year.

“These changes hit those on earning well below the average wage and are particularly harsh for women.

“Combined, these changes could lead to effective marginal tax rates of possibly 100% or higher for some women, particularly as family tax benefit part A begins to decrease at $51,903.

“Graduates caught between these policies will experience considerable financial stress; graduates earning $51,000, most of whom are likely to be women, will have less disposable income than someone earning $32,000.”

Effective marginal tax rates are the proportion of an additional dollar of earnings that is lost to both income tax and the reduction of mean-tested government payments.

The report, Gender Lens on the Budget – the second annual assessment of the impact of the budget on Australian women – points out that women are overrepresented at lower-income levels and changes to government benefits and increases in taxes have a disproportionate effect on women.

The report says that, according to statistics from the Australian Taxation Office, the median income for women was $47,125 in 2014-15, while for men the amount was $61,711.

The report notes the budget papers supply no modelling outlining the EMTRs for different groups of women.

The foundation welcomes “some significant improvements in infrastructure, disability support, health and housing” in the 2017 budget.

The report says the latest budget contains policies that alleviate some of the proposed cuts of previous budgets, which is a welcome development, but it says the latest economic statement “doesn’t radically turn things around for women”.

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In her foreword to the report, feminist, social activist and retired public servant Marie Coleman, who heads the foundation’s social policy committee, notes that treasury has a micro-simulation tool to assess distributional impacts of budget measures.

“We are at a loss to understand how measures could have been introduced in different portfolios which come together to produce EMTRs of up to 100% or more when the government continues to emphasise the need for greater productivity and to encourage female workforce attachment,” Coleman says.

“It is quite clear to us that, notwithstanding the elevation of the office for women to full divisional status and its relocation in the Department of Prime Minister and Cabinet, that there has not been any effective gender aware analysis in the formation of this budget.”

Coleman says the foundation does not doubt the prime minister’s personal commitment to enhancing equity for women and girls but she says the government needs to produce a women’s budget statement to carefully assess the distributional impacts of various policy measures.