Treasurer Scott Morrison has revealed another key goal for his first budget, telling The Australian his “enterprise tax plan” will channel increased revenue into tax relief aimed at supporting the transition from the mining boom to broader based growth.
The tax office now has enough information about the structures of major multinational companies to estimate the additional tax revenue, he said.
Morrison today confirmed to reports that there would be tax cuts for business in Tuesday’s budget, but he won’t be fast tracking the cuts so they’re in place before an expected July 2 election.
“The budget will be legislated in the usual way,” Morrison said.
However, some special appropriation bills will be introduced into parliament on Monday to ensure continuity of supply over the weeks leading up to the poll, which is expected to be called this week.
Also flagged are tax adjustments for average-earning Australians to offset the impact of wage inflation pushing them into the second-highest tax brackets, otherwise know as bracket creep.
Average full-time ordinary time earnings sit at just above $78,000, near the top end of the 32.5 per cent tax rate.
It’s estimated that 300,000 taxpayers will fall into the 37 per cent tax, which applies to every dollar earned between $80,001 and $180,000, over the next few years.
Cabinet minister Simon Birmingham says the government wants to help middle-income Australians who want to earn a few extra dollars but face disincentives because of the higher tax bracket.
Lower-income families already have a high tax-free threshold when family tax benefits and other measures are taken into account, and welfare payments are indexed, he told Sky News.
The budget will also contain a $5 billion pot for major building projects across the nation, which The Australian reports will be divided as follows:
- NSW $2.2 billion
- Victoria $2.4 billion
- WA $750 million
- Also some money for South Australia and Queensland.
One Liberal backbencher has acknowledged negative gearing – which the government won’t touch in the budget – has ramped up house prices to the detriment of younger Australians.
Bennelong MP John Alexander, who led a parliamentary inquiry into housing affordability, says the market is becoming dominated by speculative investors.
“Too often we see the young couple getting beaten out at the auction, and then renting out the very place that they were trying to buy,”” he told ABC TV.
The Greens describe the government’s budget strategy as straight out of the “Liberal Party play book – tax cuts and terror”.
“You try and bribe the wealthiest in this country to vote for you and you scare everyone else into voting for you by running terror ads on television up until election day,” Greens MP Adam Bandt told reporters.
A federal election for July 2 is expected to be called this week.
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