The LITO is an automatic tax refund – currently capped at $700 per year – which low-income earners receive when they lodge their tax returns.
Increasing the cap to $3000 would ensure the nation’s lowest-income earners stay ahead of inflation. Those earning between $32,000 and $46,000 would receive a tax cut of more than $2,000 per year.
The reforms would help those who’ve been hit hardest by inflation: workers and families whose nominal wages may have risen, but whose real wages have fallen, as a result of surging prices, particularly on essentials like food, energy and rent.
The analysis shows the cost of increasing the LITO would be $11.98 billion per year. This revenue could be replaced with a gas export tax – as suggested by the ACTU – which could raise $17 billion.
Recent polling also shows widespread support across party lines for a 25% tax on gas exports, with particularly strong support among One Nation and Greens voters.
One Nation yesterday announced a policy to charge the gas industry royalties, while Independent Senator David Pocock threw his support behind a 25% gas export tax.
“This is the engine room of the cost-of-living crisis – the current tax settings mean that Australian families on low incomes are not keeping up with price rises,” said Dr Richard Denniss, co-CEO of The Australia Institute.






