If you’re hoping for an extra tax rebate this year, you’re not alone.
The clock is ticking for Scott Morrison’s government to get the promised tax relief passed in time. Mainly because results are still coming in on a few closely contested seats. And it remains unclear if parliament will resume in time to get the tax cuts through before the fiscal year ends on 30 June.
Morrison has made this a priority, however. And he has the Reserve Bank of Australia’s seal of approval. RBA Governor Philip Lowe says that Morrison could improve household incomes more significantly if it passes promised tax cuts in the coming months.
Sigh of relief for Australian households
Since Saturday’s announcement of a continued Morrison government, we’ve seen a rebound in the markets — especially with the big four banks, finally finding stability after suffering the threat of a Labor leadership. Businesses are pleased to see their health will continue under a sensible and stable government.
According to AAP, key Morrison government advisor, Arthur Sinodinos, believes Australia’s economy will be better off under Liberal leadership. And if they can approve the tax cuts before the end of this financial year, he says Australians will have something to show for it — an extra $1,080 for people earning up to $90,000.
But the clock is ticking. During an event in Brisbane on Tuesday, Mr Lowe said,
‘If that does not occur and there is no way to get the money to households, the household income growth will be 0.3 per cent lower over the course of this calendar year than I showed you in that graph.
‘That is moving in the wrong direction.
‘It would be good if there were a way for the households to get those tax offsets but the timing may mean that that’s very difficult and it may have to wait until next year.’
Mr Sinodinos believes the next order of business will be getting other countries to abide by the international trade system.
RBA considers dropping interest rates
In another announcement from the RBA, interest rates are under consideration of being cut. On Tuesday, Mr Lowe announced that inflation would not increase back to the 2–3% target unless unemployment levels fell.
Just before the election, the national unemployment rate rose to 5.2%, from a recorded 4.9% earlier this year. And with Australia’s housing market to sink only further this year, there may be only so much Morrison’s government can do to amend the economy.
Mr Lowe said this past year, households have seen their taxes increased by 10%, compared with an income growth of only 3.25%. However, he doesn’t expect the trends to continue.
‘First, the tax offsets for low- and middle-income earners announced in the recent budget will boost disposable income and, second, it is likely that we will return to a more normal relationship between growth in incomes and tax paid.
‘Our expectation is that the stronger growth in disposable income will flow through into household spending, although this will take some time.’
If history is anything to go by, property markets suffer right before a financial crash. We’re not sure if this damage control, while necessary, is enough to pump the brakes on an already sick economy.
We guess we’ll find out, hopefully before the end of June.
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