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As the Federal Government hands down the “most important budget since World War II” this evening, Australians can expect to see further tax cuts and a $200 billion deficit for the 2020/21 financial year.
Whilst having been warned of a debt and deficit disaster, the government has acknowledged that to grow the economy they should be spending more money, at least until the employment rate hits 6 per cent.
On Tuesday morning, Treasurer Josh Frydenberg told reporters: “I will lay out our economic recovery plan to rebuild the Australian economy and secure Australia’s future.”
“Our plan will create jobs. Our plan will create opportunity. Our plan will drive investment. Our plan will grow the economy and guarantee the essential services Australians rely on.”
Last year, Parliament passed the Coalition’s three-stage tax cut package.
This year’s Federal Budget will see the tax plan fast-tracked, with tax cuts scheduled for 2022 to be brought forward by two years and backdated to July.
In July, Treasurer Frydenberg spoke of the government’s plans for the tax cuts to be brought forward, saying: “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’s one way to do it.”
The cuts will see people earning up to $90,000 potentially receive up to an extra $1080 a year, and those earning more than $90,000 annually could receive up to an additional $2565 per year.
“Tax relief allows more Australians to keep more of what they earn,” said Mr Frydenberg.
“It rewards effort, encourages the power of aspiration, but it also encourages and leads to greater economic activity as people with tax relief spend more.”
The Government is hopeful they will be able to implement the plan by the end of October 2020.
The tax cuts will provide an estimated $12 billion for the economy this financial year, with the Government hoping the money will be spent rather than saved.