Australia’s taxpayers could receive another tax cut sooner than expected, under plans the government is currently mulling.
Federal Treasurer Josh Frydenberg confirmed to the ABC on Wednesday that there may be a change to the income tax cut schedule.
“There are three stages to those legislated income tax cuts and, you know, the benefit was very clear. We’re creating one big tax bracket between $45,000 and $200,000 where people pay a marginal rate of no more than 30 cents in the dollar,’’ Frydenberg said.
"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.”
As it stands, stage two of the tax cuts are due to come into play from 1 July 2022. Under that stage, the 19 per cent tax rate threshold is increased from $41,000 to $45,000. Additionally, the 32.5 per cent threshold is increased from $90,000 to $120,000. This was estimated to cost $20 billion.
The third stage is due to come into force on 1 July 2024 will see the 32.5 per cent rate applied to Australians with an income between $41,000 and $200,000.
Last year, the government introduced the $1,080 tax offset which was delivered to around 4.5 million Australians.
These next stages of cuts will deliver significant savings to taxpayers: under stage two, someone earning $120,000 will be $2,565 better off.
Then, under the stage three cuts - which wipe out an entire tax bracket - someone earning $180,000 will have an extra $8,640.
Westpac CEO Bill Evans called for the tax cuts to be brought forward in June.
"The key to boosting demand is not corporate tax cuts to lift investment. Businesses will invest and employ if they anticipate rising demand," he said.
"Lifting household income growth through cutting personal tax rates is the key. A great start would be to bring forward the personal tax cuts which are legislated for July 2022 to January 2021 or earlier if possible."