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The latest Household, Incomes and Labour Dynamics in Australia (HILDA) Survey reveals that over the past two decades, the country’s highest earners have received significantly more tax relief than the average worker due to the phenomenon of ‘bracket creep’. The HILDA survey, conducted by the University of Melbourne, tracks economic well-being and other aspects of life in Australia. It found that the top 10% of earners experienced a 2.4% reduction in their tax rate from 2003 to 2021, in contrast to a modest 0.5% change for the general populace. University of Melbourne professor and co-director of the HILDA survey Roger Wilkins said that, on average, income tax has gone down during the past 21 years. However, if wages and income rise without adjustments to income tax rates and tax thresholds, the proportion of a person's income taken by taxes will increase. This is known as bracket creep. “Higher inflation since 2021 has exacerbated the issue of bracket creep and so I’d expect average tax rates to rise more sharply. The Stage 3 income tax cuts don’t fully address this,” he said.
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