Treasurer Josh Frydenberg has hinted that scheduled income tax cuts could now be brought forward in a bid to stimulate spending.
The legislated tax cuts will see the top threshold of the 19 per cent income tax bracket increased from $41,000 to $45,000, and the top threshold for the 32.5 per cent tax bracket raised from $90,000 to $120,000 — scheduled to be introduced from July 2022.
From July 2024, the 32.5 per cent and 37 per cent will be abolished, with a 19 per cent tax rate for those earning between $18,201 and $45,000, 30 per cent for incomes between $45,000 and $200,000 and 45 per cent as the highest rate for incomes above $200,000.
“We are looking at that issue, and the timing of those tax cuts, because we do want to boost aggregate demand, boost consumption, put more money in people’s pockets, and that is one way to do it,” Mr Frydenberg said on Wednesday.
Responding to the reimposed stage 3 restrictions in Melbourne, Mr Frydenberg added that there would be additional support measures in place once the JobKeeper program comes to its scheduled end in late September.
“There will be another phase of income support. It will be targeted, it will be temporary, it will be designed to get help to people who need it most,” Mr Frydenberg said.
“We recognise there are some sectors that are going to be slower to recover than others. We’ve already announced sector-wide support for construction, for aviation, for tourism, and of course, the situation in Victoria means that that state will be behind others in the recovery.”
Prime Minister Scott Morrison also committed to extending business support beyond September, but shot down suggestions that it would only be targeted at Victorian businesses facing a fresh six-week lockdown.
“There will be a further phase of how we continue to provide support, and as I was able to assure the [Victorian] Premier the other night, just like I can assure people in industries or in businesses or parts of the country that are more affected by COVID than others, then where there is the need, then there will continue to be support,” Mr Morrison said.
“We’re running a national program of support. That national program of support will give people in the same areas of need the same support. So, it’s not a state-based program or anything like that, in the same way it has operated up until now.
“I think all Australians know that level of support can’t go on forever. But the needs are continuing and we understand that. We have understood that for some time and we have been preparing our next phase on the basis of that understanding.”
The government will release a detailed economic update on 23 July, together with the outcome of its JobKeeper review.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.