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Positive Budget outcomes for the average Australian worker are a must this year, and it’s not unlikely that they’ll come in the form of personal tax rate tweaks.
The $36.5bn deficit predicted in the Mid-Year Economic and Fiscal Outlook means that the Government is unlikely to have much room to play with for Budget sweeteners this year.
Nevertheless, the Treasurer will need to come up with something positive for the average worker.
So, don’t be surprised to see a small, but welcome, tweak to the personal tax rates and thresholds. This was the case last year when the 32.5 per cent personal tax threshold was increased from $80,000 to $87,000. That 2016 measure cost the Government $4bn, so don’t expect anything more than a token “sandwich and milkshake” tax cut in a non-election year.
The other personal income tax item to watch is the 2 per cent Budget deficit levy on incomes over $180,000. After 3 years of operation, this measure is due to cease on 30 June. While the Treasurer has previously stated that the Budget repair levy would not be extended, it is a tempting target to pay for a small tax cut for average workers.
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