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Frydenberg flags incoming $12bn tax cuts

Lucy Dean
·2-min read
Man handling fifty dollar notes finance. Money and bills economy
The Treasurer is hoping impending tax cuts will lessen the COVID pain. Image: Getty.

Federal Treasurer Josh Frydenberg is hoping impending tax cuts will lessen the pain of the JobKeeper expiry, with more than $12 billion in tax cuts to set in over the next seven months.

Around $9 billion in tax cuts has already flowed to 8.8 million Australians during the pandemic, Frydenberg will note at a Business Council of Australia Dinner on Tuesday, but more is yet to come.

The Government brought forward the second stage of the tax cuts in October last year to help deal with the COVID-19 fallout. The cuts, originally scheduled for July 2022 but backdated to come into effect from July 2020, delivered cuts for Australians earning between $45,000 and $200,000.

Under this stage of the cuts, Australians earning $120,000 score an extra $2,745 in relief, while those earning $40,000 receive $1,060.

Image: Federal Treasury.
Image: Federal Treasury.

"Even as temporary emergency supports like JobKeeper come to an end, a further $2 billion per month in tax cuts will flow to Australians between now and the end of September,” Frydenberg will say.

"Allowing Australians to keep more of what they earn will help to support the economic recovery by giving households more money to spend at local businesses."

The Government is hoping the tax cuts will generate $2.5 billion in monthly economic activity and replace the supports provided by the JobKeeper supplement, according to reports in The Australian.

Frydenberg will also discuss the Federal Budget, with the Budget currently in a $100 million deficit. However, the cost of COVID-19 in Australia is expected to surpass $1 trillion by 2025.

Frydenberg will say the Government is at its best when it is acting as a catalyst for homes and businesses to spend, invest and grow.

“JobKeeper had to end as its continuation beyond 12 months would be counter-productive to the economy propping up unsustainable businesses and preventing the more efficient allocation of workers and capital across the economy,” he said.

The 2021/22 budget is due on 11 May.

With AAP.

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Image: Yahoo Finance
Image: Yahoo Finance