Scrap LMITO and replace the cash splash with real tax reform
Rather than roll over the poorly designed rebate for a third time, the Treasurer should include an additional cut in marginal rates in the stage 3 package.
One problem for the 2022-23 federal budget is the fate of the $8 billion low- and middle-income tax offset (LMITO) and its relationship with economic management, deficit reduction and tax reform.
Treasurer Josh Frydenberg emphasises that the offset, introduced in its current form in 2019-20, was always meant to be a temporary measure, but it has now lasted three years and he doesn’t rule out extending it again.
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Robert Carling is a Senior fellow at the Centre for Independent Studies, and a former IMF and federal and state Treasury economist.
