Billions in bonus tax cuts are being handed out to low and middle income workers to ensure Australia continues to find its way out of the COVID-19 crisis.
The Herald Sun may unveil a new round of comprehensive income tax relief that will be a centerpiece of the Morrison government’s stimulus plan in next month’s federal budget.
Approximately 10 million workers should lose low- and middle-income tax rewards – worth up to $ 1,080 for anyone earning between $ 48,000 and $ 90,000 – on June 30, after being included as a one-time incentive in the was planned last year.
However, senior government sources have told the Herald Sun that the budget will bring additional relief to ensure workers aren’t forced to pay more taxes in the next fiscal year.
It is believed that the most likely option that Scott Morrison’s budget razor gang is debating this week is to extend the low- and middle-income tax rebate for another 12 months. This would cost about $ 7 billion.
The compensation will be paid as a refund when employees file their tax returns, which means the existing relief will start flowing from July this year. Extending the compensation for another year would give millions of Australians a guaranteed cash boost in 2022.
It provides a tax cut of up to $ 255 for those less than $ 37,000, which increases to $ 1080 for approximately 3.4 million Australians who earn $ 48,000 to $ 90,000. The compensation will then expire for employees who earn up to $ 126,000.
Research by the Bankwest Curtin Economics Center released earlier this week showed that withdrawing the offset would raise the marginal effective tax rate for an employee to $ 40,000 from 18.5 percent to 26 percent. This would also disproportionately affect women, who would face an average tax increase of $ 502 in the next fiscal year, compared to an average increase of $ 385 for men.
According to senior figures, the government did not want to increase the tax burden on Australians as the recovery continued, especially as the short-term forecast for wage growth remained unchanged.
The prime minister said Monday that the second phase of the government’s stimulus package, which is listed in the budget, will keep “a clear focus on lower taxes”.
And Treasurer Josh Frydenberg said last week that the government was unwilling to move to budget repair, arguing that more spending was needed to prevent economic “scars”.
On Wednesday evening, a spokesman for Mr Frydenberg said: “The government is not commenting on budget speculation.”
In the October budget, in addition to the one-time extension of the compensation, Mr. Frydenberg brought forward the second stage of the statutory tax cuts. This was set up to generate an economic upturn of USD 12.5 billion over a period of two years.
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