Two out of three households will receive enough tax cuts and extra welfare payments to cover average price hikes from the carbon tax.
But almost three million other households will be left out of pocket, including an estimated 285,000 self-funded retirees.
Families Minister Jenny Macklin said, on average, households would receive $10.10 a week in government help to cover cost-of-living increases of $9.90 per week.
“The package we’re putting forward to households will provide assistance to the vast majority of pensioners, lower-income households and families — people who will need assistance,” she said.
It will do so by redirecting more than 60 per cent of carbon tax receipts in the first three years of the scheme into $8 billion in tax cuts and $6.9bn in top-up payments, starting next year.
Single pensioners and self-funded retirees who hold a Commonwealth Seniors Health Card are in line for up to $338 a year and couples for up to $510 a year combined, with an upfront lump sum paid ahead of the July 2012 start date for the carbon tax.
Students and the unemployed will receive a more modest $218 a year for singles, $234 a year for single parents and a combined $390 a year for couples.
And families on Family Tax Benefit A will secure up to $110 a child and those on Family Tax Benefit Part B up to $69 extra. The increases will be permanent.
But the biggest share of carbon tax receipts will be paid out in tax cuts for taxpayers earning less than $80,000. The government has announced it will progressively raise the tax-free threshold from $6000 to $19,400 while changing the low-income tax offset, effectively increasing the level at which people start paying tax, from $16,000 now to $20,542 in 2012-13 and $20,979 in 2015-16.
The decision moves part of the way towards the Henry tax review’s recommendations for simplifying the tax system and will free more than one million people from the obligation of lodging a tax return.
It will also deliver tax cuts of up to $385 for most people earning under $80,000.
The government will review whether the top-up payments compensation offered to low- and middle-income earners is enough every May in the budget.
But it has already drawn fire from National Seniors, whose chief executive Michael O’Neill warned yesterday that self-funded retirees ineligible for the Commonwealth Seniors Health Card had been exposed to unacceptable price hikes from the carbon tax.
“There are 285,000 self-funded retirees aged over 65 who don’t get one brass cent of compensation or support,” he said.
The package favours dual-income households because it delivers so much of the assistance through the tax system.
Single-income families with a child under five years, for example, will be left out of pocket by the carbon tax once their income hits $65,000, while some dual-income couples with no children will be fully compensated until their combined earnings reach $110,000.
Ms Macklin said the government would address that with an end-of-year supplement.
