Unexpected large cash windfall gives Treasurer a “pre-election” budget to deliver

by Sharon on May 7, 2018

As the Government is set to hand down its final budget this Tuesday, May 8, many expect the Treasurer to deliver a pre-election budget to win over voters.

Given the poor economic circumstances faced by Governments in 2010, 2013 and 2016, for the first time in 11 years the Treasurer will take advantage of an unexpectedly large cash windfall as taxes were higher than expenditure, something no Treasurer has enjoyed since the Global Financial Crisis in 2009.

Revenue streams from company tax grew by 23.3 per cent and personal income tax boosted the budget bottom line by an extra 5.4 per cent according to data from the Department of Finance. It’s also meant the Government can now boast about having the lowest deficit figure since 2009 at $14 billion with the deficit projected to reach a low of $2.5 billion by 2020.

While the Government has been tight lipped and kept leaks at bay, Australian voters will expect the much hyped promised tax cuts, a return to surplus faster by 2021 and major spending on infrastructure and services.

We can expect low and middle income earners will be the first to benefit from a tax cut assisting those affected by bracket creep where employees are pushed into higher tax brackets from wage inflation. Its expected tax cuts will be phased in immediately for those in the bottom two tax brackets up to $87,000 a year while those earning above $180,000 will have tax cuts phased in from 2024.

It’s contentious company tax cuts for small to medium companies with a turnover of under $50m is still on the agenda with the Government still negotiating with key cross-bench senators to pass its bill to deliver its promise to the business community.

The National Disability Insurance Scheme levy is set to be scrapped with the Government finding increased revenue to fund the initiative.

Infrastructure is set to receive $9b allocated to roads, rail and building other key projects.

One thing for sure is Australians whether interested or disinterested in politics will be in front of a screen this Tuesday, May 8 at 7:30PM to see how they will be affected by our policy-makers.

 

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