The coronavirus pandemic has now led to a steep decline in personal income tax, company tax and GST receipts, with the Treasury revising tax revenue down by $95.6 billion across 2019–20 and 2020–21.
Despite the government’s economic and fiscal outlook not detailing any new tax measures, Treasurer Josh Frydenberg said the government would not look to increase taxes to recover its forecast budget deficit of $184.5 billion this year.
“We are the party of lower taxes and we’ve proven that,” Mr Frydenberg said.
“Our pathway to growing the economy is through lower taxes, not higher taxes.
“In terms of paying back this debt, it will take a number of years. We’re not putting a date on it because we want to grow the economy, and what I can tell you is, we will be doing everything to get people back into jobs and ultimately to grow the economy.
“But the pathway to growing the economy is through skills programs, infrastructure investment and tax reform.”
The government had also previously hinted at accelerating personal income tax cuts that have already been legislated to kick in from 1 July 2022.
KPMG partners Ben Travers and Hayley Lock said that while Thursday’s economic update had remained silent on the possibility, there was still an opportunity for the government to make an announcement in its 6 October federal budget.
“Many will have been keen to see the federal government announce the acceleration of the personal income tax cuts that Parliament has already legislated for 2022–23 and 2024–25,” Mr Travers and Ms Lock said.
“The federal government will be weighing up the psychological lift and consumer-demand impact of this against the costs and perceptions surrounding further increasing government debt.”
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.