“This can not be just another budget because these are extraordinary times”, Treasurer (finance minister) Scott Morrison told parliament in Canberra in a prepared speech.
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Revealing plans to crack down on multinational tax avoidance and to reduce domestic business taxes, Federal Treasurer Scott Morrison insisted the Budget was created to promote “jobs and growth”.
“Australians know it is no easy task to secure jobs and growth in a highly competitive, volatile and uncertain global economy”, Morrison continued. “The subsidies are just a smarter way of leveraging what you would otherwise spend on Newstart and other welfare payments”, Morrison said.
Prime Minister Malcolm Turnbull has said he will dissolve both houses of parliament after the budget and call an election by 11 May.
Tuesday’s budget will form the backbone of the Liberal-led coalition government’s pitch to voters for re-election. “But China could run into more troubles down the track and that would be big trouble for Australia’s budget in particular”.
Hidden in the budget is also a provision for election promises to come over the next eight weeks, although, apparently, with a catch. “It is a Budget about stabilising the nation’s finances, not radically changing them”.
It appears this year’s budget is about two things: neutralising Labor’s lines of attack for the election, while emphasising a few key differences that play up the government’s economic management credentials.
The Reserve Bank of Australia (RBA) cut its official cash rate by 0.25% to 2% on Tuesday, after inflation figures last week revealed core inflation at 1.5%, the lowest on record, and well below the targeted 2-3%.
In its latest economic blueprint, the government plans to reduce Australia’s deficit to AU$37.1 billion next year and to AU$15.4 billion by 2018-19. But this is forecast to drop to A$6 billion by 2020.
It builds on a 1.5% company tax cut handed to incorporated businesses with annual turnover of up to $2 million, which was introduced in last year’s budget.
The government will also increase the unincorporated small business tax discount to 8% and extend the threshold from a turnover of $2 million to less than $5 million.
The threshold will continue to increase each year until 2023 to 2024, after which time the rate of company tax will be cut further to 25% by 2026 to 2027. “The incentives will also encourage liquor store operators to take on young job-seekers with subsidised internship placements and will be well received by our members”.
But four hikes are planned for the excise tax on cigarette.
Treasurer Scott Morrison says companies caught shifting profits offshore will be taxed at a rate of 40 percent.
“The best way to boost growth now is giving businesses greater capacity to invest in more productive enterprises, and giving workers a better reward for their effort”, says Business Council Chief Executive Jennifer Westacott.
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“Ultimately this more restrained approach must be better for business confidence, even if it doesn’t satisfy the media and political opposition appetite”, he said. Australia will nearly certainly go to the polls on 2 July.
