An avid watcher of federal budget deliberations believes the federal government should reconsider its promise of personal income tax cuts this year, warning budget repair is far from finished.
But acting treasurer Mathias Cormann believes the government is in a position to focus on such reductions when government spending is at its lowest in 50 years and there is a commitment to return a budget surplus in mid-2021 in a “prudent and sustainable fashion”.
Chris Richardson from Deloitte Access Economics says the better news on the economy is flowing through to the budget.
“That’s great, but we shouldn’t repeat old mistakes by taking that and making permanent promises to ourselves,” Mr Richardson told AAP on Monday.
“Until politicians stop mollycoddling their bases, budget repair looks unclear.”
While Standard & Poor’s confirmed Australia’s top-tier triple-A credit rating last week, the global ratings agency also left the outlook on negative.
This reflects S&P’s view of the “significant uncertainty” around the ability of the budget returning to surplus in the early 2020s as repeatedly promised by the government.
Senator Cormann, who is also finance minister, said personal income tax relief is part of the government’s commitment to helping hard-working Australians deal with cost of living pressures.
“We will always deliver lower taxes if and when that can responsibly be delivered,” he told AAP.
“Government should only take as much money out of people’s pockets as is necessary to deliver the necessary services and benefits provided by government. As much as necessary, as little as possible.”
Greens leader Richard Di Natale said it is clear that you either support tax cuts or you support investment in Medicare, hospitals, clean energy and protecting the environment.
“This is a government that would prefer to throw a few election bribes in the lead up to an election rather than setting this country up for the future,” Senator Di Natale told reporters in Melbourne.
Treasurer Scott Morrison has jetted off to the US for talks with business leaders and where tax reform will be high on his agenda after the US Congress passed a cut to the federal corporate tax rate from 35 per cent to 21 per cent.
“I will explore the impact of US corporate tax changes on companies’ operations, particularly employee wages, their investment and innovation decisions and hiring intentions,” Mr Morrison said in a statement.
He will be seeking support for the Australian government’s cut in the company tax rate to 25 per cent from 30 per cent for all businesses when he gets back for the first parliamentary sitting of the year over the next fortnight.
Mr Morrison’s trip includes a meeting with Exxon Mobil, a firm campaign group Make Exxon Pay describes as a global tax avoider that pays no corporate tax in Australia.
“Why is Scott Morrison meeting with Exxon Mobil to see what value they got from a tax cut, when they don’t even pay any tax in Australia?” campaigner Jason Ward said in a statement.