Australia Working on Bringing Forward Tax Cuts in Budget
Australia working on plans to fast-track income tax cuts in the budget next month to turbo-charge the economy out of recession.
(Bloomberg) -- Treasurer Josh Frydenberg said Australia’s government is working on plans to fast-track income tax cuts in the budget next month as it seeks to turbo-charge the economy out of its first recession in almost 30 years.
Changes to income tax brackets are already legislated to come into effect in mid-2022 and mid-2024, but may be brought forward to boost consumption. Frydenberg told ABC radio Thursday the changes would be among a raft of stimulus in the Oct. 6 budget.
The treasurer also said the government was considering its options on whether to freeze a legislated increase in mandatory pension contributions, noting a trade off between boosting wages and increasing retirement savings.
Australia’s economy contracted by the most on record last quarter, underscoring the need for unprecedented stimulus measures as the recovery is buffeted by Victoria state’s renewed Covid-19 outbreak and lockdown.
Frydenberg said it would take five years to get the economy back to where it was.
“Treasury’s advice is that in the September quarter it’s likely to either be just negative or flat, but that again will depend to some extent what transpires in Victoria,” Frydenberg said in a separate interview with Sky News. “What happens in Victoria will be very important for our economic recovery overall.”
The government is ramping up pressure on states and territories to reopen their borders, warning the closures are devastating the tourism industry and acting as an anchor on the economy.
Prime Minister Scott Morrison is pressing for the states to agree on a definition of Covid-19 “hot spots” -- to enable borders to reopen but allow more targeted controls on inter-state travel.
Under the nation’s superannuation system, employers pay 9.5% of a worker’s gross salary into a retirement fund. That will gradually rise to 12%, starting from next year. But some lawmakers in the governing Liberal Party are opposed to the increase, saying it will further impact already anemic wage growth and be an additional burden on struggling businesses.
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