Angus Livingston, AAP Senior Political Writer
(Australian Associated Press)
Workers will get immediate tax relief with the promise of more to come if the coalition wins the election, as a booming economy sends the budget back to surplus a year early.
Treasurer Scott Morrison is riding record job growth and company tax revenue to support his $140 billion plan to put hundreds of dollars a year back in taxpayers’ pockets.
“This is not spending or a giveaway. We are simply enabling Australians to keep more of what they have earned,” he said in his budget speech in Canberra on Tuesday.
The tax cuts start at $200 a year for those in the lowest bracket, rising to $530 a year for those earning up to $90,000, from July 1 this year.
“Anyone who thinks that doesn’t matter clearly is not in touch,” Mr Morrison told reporters.
That $90,000 figure is the new threshold for the 32.5 per cent tax bracket, while in four years time the $37,000 tax threshold for the 19 per cent rate will be lifted to $41,000.
And in 2024/25 – which is six years away, and assuming the coalition is still in power – the government will abolish the 37 per cent rate entirely.
That means everyone earning $41,000 to $200,000 will pay the same 32.5 per cent of their income.
Laws to cement the plan in place will be introduced to parliament on Wednesday, putting immediate pressure on the federal opposition to support them.
Labor is backing the first set of cuts, but says the others are a “hoax”.
“Most of this package is off in the Never Never – it’s a hoax for Mr Turnbull to tell people they have to vote for him at least two more times before they (get) tax relief in 2024,” shadow treasurer Chris Bowen said.
To pay for the cuts – and a $75 billion roads and rail plan set to ease congestion in major cities – the coalition is banking on rising revenue from more people in work.
Record jobs growth means the proportion of working-age Australians relying on welfare has fallen to 15.1 per cent – the lowest level in more than 25 years.
A crackdown on multinational corporations, which has already brought in $7 billion a year, will go further and include ways to make sure digital companies pay tax in Australia.
The budget deficit will be $14.5 billion in 2018/19 – the best result since Peter Costello’s last budget – before narrowing to a $2.2 billion surplus in 2019/20.
That’s a year earlier than expected, and means whoever wins the next election will get to deliver the first budget surplus since before the global financial crisis.
Australian Chamber of Commerce and Industry boss James Pearson says the budget is a positive one.
“But it leaves Australia more exposed than we would like to any deterioration in the global economic environment,” he said.
ACTU secretary Sally McManus says the budget relies on “failed trickle-down economics to trick Australians into giving a failed government another term in power”.