Scott Morrison will try to get the economy back on track with the October 6 budget
Scott Morrison has responded to an ad slamming potential tax cuts for millions of Australians.
The October 6 budget is expected to lead to tax cuts planned in 2022, meaning middle and low-income earners can keep more of their money.
A TV ad from left-wing think tank The Australia Institute says the cuts threaten to harm public services and will not provide the boost the economy needs to recover from the coronavirus-induced recession.
A government spokesman criticized the campaign, saying Daily Mail Australia: ‘In times of recession, the Australia Institute wants to take money out of its wallet.
‘We are always focused on how we can give it back to them and lower taxes.
“The Australia Institute and the Labor Party have never had a tax increase they didn’t like.”
The campaign is backed by 40 prominent Australians, including two former Reserve Bank officials, a former Liberal Party leader and head of the welfare lobby group ACOSS.
“Cutting taxes on already wealthy Australians will undermine the long-term strength of our public services, such as health and education, while doing little to boost economic growth,” said Ben Oquist, executive director of The Australia Institute.
‘Tax is an investment in our society. Those who want tax cuts today will argue for cuts in services in the future. ‘
Research from the institute published in recent weeks suggests the cuts will benefit high-income people, who are more likely to save than spend the extra money.
“We need a significant boost for a longer period of time,” said Stephen Grenville, former deputy governor of the Reserve Bank.
“Lowering the top income tax would be a weak incentive that undermines the fair and progressive tax structure we will need once the COVID crisis is over.”
Former federal liberal leader John Hewson said tax cuts will not be good for the coalition’s election expectations in the long run.
|Income||Reduction compared to 2017/18|
|$ 30,000||$ 255|
|$ 40,000||$ 580|
|$ 50,000||$ 1,080|
|$ 60,000||$ 1,080|
|$ 70,000||$ 1,080|
|$ 80,000||$ 1,080|
|$ 90,000||$ 1,215|
|$ 100,000||$ 1665|
|$ 110,000||$ 2115|
|$ 120,000 +||$ 2,565|
“They increase inequality and fail to ensure job security and rising wages, while our economy is still struggling to get out of recession,” said Dr. Hewson.
The cuts would raise the upper limit for the marginal tax rate of 32.5 percent from $ 90,000 to $ 120,000 and raise the upper limit for the 19 percent rate from $ 41,000 to $ 45,000.
In July, treasurer Josh Frydenberg said he “looked at the timing of tax cuts “because they” boost aggregate demand, boost consumption and put more money in the wallets. “
Some tax experts believe that Mr. Frydenberg would get more out of taxpayers’ money by focusing on business initiatives.
BDO tax partner Mark Molesworth said personal tax cuts alone will not be enough to provide any meaningful boost in the face of the first recession since the early 1990s.
“More and more Australians are frugal with their money, so even as Christmas approaches, a tax cut will not lead to spending,” Mr Molesworth said Monday.
“To encourage consumer spending, it would be better to look at incentives for business investment.”
These can take the form of an investment allowance, which would provide an incentive to buy assets and expand the business.
He also suggested a workforce rebate, which would be paid as a cash tax break per new full-time employee set up by a company.
The October 6 federal budget will include a series of measures to get the economy back on track after coronavirus restrictions hammered the economy.
One option being considered is to encourage small and medium-sized businesses to hire new workers by paying some of their wages, government sources said. The Australian.
This would be different from the JobKeeper scheme that pays companies to keep existing employees when their earnings are badly hit.
The government is also being tipped to allocate up to $ 10 billion to the states for infrastructure spending.
The AFR reported that the money could be given out on a ‘use it or lose it’ basis, meaning states would have to prove they are spending it quickly to qualify for more.
A spokesman for the prime minister told Daily Mail Australia: “We are not in the business of budget speculation.”
The JobKeeper payments of $ 1,500 every two weeks will be reduced to $ 1,200 from September 27 and to $ 1,000 from January for full-time employees.
Mr Morrison told the ABC on Sunday that other measures will be taken to supplement the scheme if it is reversed.
The government is reportedly considering wage subsidies to boost recruitments. Pictured: an electrician at work
“What Treasury is saying is we need to boost aggregate demand in our economy and have the full set of measures you need as a government to get that job done, and that’s what the budget will do,” he said.
And so you don’t have to stick to every size forever. There are other measures that come in and continue where others left off. We are transferring JobKeeper, it is important to do that. We always said it wasn’t something that would last forever.
‘But there are other programs and the treasurer will of course go into more detail in the budget, which have to do with the here and now, but rebuild our economy and then build for the future so that we can enter a decade of prosperity. . ‘
The unemployment rate unexpectedly fell from 7.5 percent in July to 6.8 percent in August, in contradiction with widespread forecasts of a slight increase.
About 111,000 people started work in August, the third month with exceptionally strong results.
More than half of the huge job losses in April and May have been made up.
However, that force masked a decline of 42,400 employment in Victoria, where there are still lockdowns.
Treasurer Josh Frydenberg, a Victorian Member of Parliament, said businesses in the state were still badly hit by lockdowns.
“I hope and the Prime Minister hopes that those restrictions can be relaxed as soon as COVID-safe,” he said.