Treasurer Josh Frydenberg has hinted yet again that Australians may see scheduled tax cuts earlier than expected when he presents the federal budget in October.
Unveiled in the 2019-20 budget, the $158 billion income tax cuts were designed to be delivered in three phrases. Aussies received the first phase last year, with phase two to come into force on 1 July 2022 and phase three on 1 July 2024.
But he hinted yesterday that the Federal Government was reviewing the timing of these phases.
“The tax cuts are in three different stages, and we are considering the timing of those tax cuts, and any announcements would be made in the budget,” he said.
“But it is fair to say these are very substantial reforms to our tax system,” he added.
Frydenberg has previously indicated that the income tax cuts could be brought forward, and made similar remarks to the ABC in early July.
"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,” he said at the time.
Frydenberg yesterday delivered the latest GDP figures that revealed economic growth had fallen by 7 per cent in the June quarter.
“Today’s National Accounts confirm the devastating blow to the Australian economy from COVID-19. Our record run of 28 consecutive years of economic growth has officially come to an end,” he said.
“Behind these numbers are heartbreaking stories of hardship being felt by everyday Australians as they go about their daily lives.”
The fall was steeper than the 6 per cent that many economists predicted.
While Frydenberg was optimistic about the future, indicating that consumer and business confidence had recovered by 70 and 80 per cent respectively, he also said that the “road out will take time” and “there will be bumps along the way”.
While spending has dropped off, household savings have jumped to 19.8 per cent.
“This is a reflection of the caution in Australian households but also the fact that the restrictions mean that they can't go out and consume. This savings ratio was obviously high today but it will be important in the economic recovery, as people use their balance sheets to spend as we come out of this crisis,” he said.
Frydenberg warned that the June GDP figures did not take into account Victoria’s stage four lockdown.
“This is something which will weigh heavily on the September quarter,” he said.
“Today’s devastating numbers confirms what every Australian already knows. COVID-19 has wreaked havoc on our economy and our lives like nothing we have experienced before.”
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