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Election shapes as battle over tax cut trust

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Millions of Australians are in line for a tax cut regardless of what political party is leading the nation after the upcoming federal election.

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But Scott Morrison’s government is hoping voters will trust them to deliver on the income tax relief promised in its latest federal budget, over Labor leader Bill Shorten.

Finance Minister Mathias Cormann says the Coalition has the track record required to have won Australians trust.

“Do they trust us, who have done it before, to do it should we be successful at the next election?”Cormann told reporters in Canberra on Tuesday.

“Or would they trust somebody who has a demonstrated track record of pushing higher taxes to chase ever-higher levels of expenditure?”

The government has promised to more than double a tax offset for Australians earning up to $126,000, with a single-income family expected to keep an extra $1000 from tax time this year.

It also wants to lower the 32.5 per cent tax rate to 30 per cent from mid-2024.

That comes as it is expecting a $7.1 billion surplus at the end of 2019/20, marking a significant boost from its December forecast for a surplus of $4.1 billion.

“The budget is back in the black and Australia is back on track,” Frydenberg told parliament.

The improvement comes as the government is expecting to earn $1.2 billion more in tax revenue than it had forecast in 2018/19, with strong commodity prices helping it to rake in more of company earnings.

But things weren’t all good news, with the budget paring back expectations for economic and wages growth, while acknowledging challenges facing the nation’s economy.

Shadow treasurer Chris Bowen said the budget was an “election con” that did not put forward plans to deal with trends such as sluggish wage growth.

Labor has also pledged to improve upon the coalition’s offering, matching its bigger offset for giving extra relief to lower-income earners.

Business groups haven’t seen things like the opposition, and are embracing the budget’s tax cuts in hopes they will stimulate the slowing economy.

They’re also pleased with the extra tax relief for small businesses, including raising the threshold of the government’s instant asset write-off from $25,000 to $30,000.

Tax partner at accounting firm BDO, Mark Molesworth, says the tax plan indicates stability.

“The endless changes to the tax system seemed to have stopped here,” Molesworth said.

– AAP

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