Federal Budget 2016: Treasurer Scott Morrison delivers document aimed at ‘driving jobs and growth’
AS Australians woke up to figure out whether they would be better off or poorer, the PM and Scott Morrison were already hard at work.
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AUSTRALIA’S prosperity has been placed in the hands of the nation’s tradies and middle income earners with $9 billion in tax cuts aimed at getting them to work more, earn more and spend more.
But to pay for it, the government will launch a $12 billion raid on superannuation concessions for the rich, multinational tax-evaders and hike ‘‘sin taxes’’ on smokers.
In an election eve Budget designed to kick life back into the economy — as well as the government’s political fortunes — about 500,000 Australians will be insulated from “bracket creep” tax rises next year.
These households received further good news with the Reserve Bank’s decision to drop interest rates to a new record low, despite the move also reflecting concerns about the economy’s strength.
The centrepiece of the long awaited “economic plan” will be a 10-year “enterprise tax” blueprint aimed at the engine- room of the economy while reducing the overall tax burden on Australians by $1.9 billion over four years.
Earners on $80,000 a year will receive the modest tax cut equivalent of an extra $315 a year, with the 32.5 per cent tax threshold shifting up to $87,000 — a measure to spare people paying more tax.
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For a worker on $200,000 this will rise to $1715 from next year when the 2 per cent temporary deficit levy is also lifted.
This will cost $3.95 billion over the next four years.
The sting in the budget tail however was a $6 billion raid on superannuation accounts of the wealthy with cuts to the concessional tax rate for those earning more than $250,000 a year.
The cap on annual concessional contributions would also be lowered to $25,000 — with a lifetime cap of $500,000 — while a limit of $1.6 million would be imposed on tax-free retirement phase accounts.
Mr Morrison said 96 per cent of people would not be affected by the changes. But many retirees will now be forced to divest money from their super.
Senior economists said the government had “gone harder” than expected.
The Treasurer said the measures were needed to make the system sustainable in the long term and necessary to deliver economy-boosting tax cuts at the other end. This will include $4.7 billion in further tax cuts and incentives for small business with the aim of eventually dropping company tax for all businesses to 25 per cent.
It will start this year with further cuts for small business — the employers of 2 million Australians — with tax rate dropping to 27.5 per cent.
A range of concessions applying to businesses with turnovers of less than $2 million will be extended to those with $10 million or less. The tax plan would bring Australia’s high corporate tax environment to a more internationally competitive one.
But it will be dodgy multinationals that will be forced to fund the tax cuts with a crackdown on profit shifting — the so called “Google Tax” — expected to raise about $3 billion.
Smokers will also be forced to cough up another $4.7 billion in tobacco tax over the next four years.
Low income earners, who Mr Morrison said had already been given a tax cut with the removal of the carbon tax and retention of compensation, however will not be left behind in the tax-mix switch.
Those earning under $37,000 will benefit from superannuation reforms which will reduce tax on contributions under a $2.6 billion plan for a low-income super tax offset and tax deductions for personal contributions.
A new plan for youth unemployment was also announced providing $200 internships for the out of work young as a $750 million welfare measure to ensure they aren’t left to a lifetime on the dole.
“This (Budget) will reward hard-working Australians for doing more overtime, picking up more shifts, taking a promotion or a better new job without being penalised by paying more tax through the higher rate,” the Budget papers said.
Mr Morrison said in his first Budget speech that Australians expected the Turnbull government to deliver an economic plan.
“Having set this critical direction and having laid out this plan, we must now commit to stay the course,” he said. “The future of all Australians and their families depend on it.”
Other savings measures included a crackdown on new welfare recipients who will be blocked from receiving the carbon tax compensation — worth about $300 a year — and which will be grand-fathered to existing recipients. This will save the government a further $1.4 billion.
About 90,000 disability welfare recipients will be reassessed for their eligibility which is expected to save around $2 billion from the NDIS.
Extra school spending of $1 billion and health funding increases of $3 billion were confirmed in the Budget.
Mr Morrison said the road to surplus would be pushed out another year with the Budget not expected to be back in balance until 2020-21.
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