Treasurer offers jobs and tax cuts from July 1 — if the Government is returned July 2

SCOTT Morrison’s election year Budget is a multi-billion dollar juggling act that could save the govt - or sink it.

IT’S a multi-billion juggling act the Government hopes will see tiny tax cuts for individuals and companies turned into the salvation of the national economy.

It also hopes the display will ensure it gets re-elected.

A neat fiscal roundabout of about $12 billion in tax increases and reductions is at the core of a Budget the Government said would immediately help business grow and create jobs.

In a no-frills, low-key appeal to voters, Treasurer Scott Morrison stuck to his theme that any spending increases would have to be paid for by reductions elsewhere.

Mr Morrison told Parliament that “whenever possible we prefer to leave a dollar in Australians’ pockets than take it for the Government’s pocket”.

In a delicate round of juggling, the Treasurer said some $11.5 billion from multinationals, smokers, and rich superannuation accounts over four years would pay for cuts to taxes on small business and income earners, and other measures.

There will be pain for some. Cigarette buyers soon will be contributing $10 billion a year to Government revenue.

And not much reward for others. The income tax changes will be worth as little as $315 a year, maximum.

But the Government is hoping that a measured approach, without sweeping, painful spending cuts, will help it stay in power.

So the Government will go into the two-month election campaign, expected to be announced by Prime Minister Malcolm Turnbull on Sunday, with a promise of lower taxes to start on July 1 — if the Coalition is returned on July 2.

Mr Morrison said the round of tax changes would leave the overall tax take just $3 billion higher after four years. But he made the bold prediction they would help boost GDP — the nation’s output — by one per cent a year, or $16 billion.

From July 1, the Government wants to increase the upper level for the mid-range income tax rate from $80,000 a year to $87,000, to prevent average fulltime earners tripping into a higher tax bracket.

Mr Morrison said this would help 500,000 workers avoid the 37 per cent tax take, the second top rate.

The Treasurer said those earning less than $80,000 were still benefiting from the carbon price compensation payments, which were retained after the Coalition government scrapped Labor’s climate change measures.

Further, Mr Morrison said they would be better off from a Low Income Superannuation Tax Offset proposed from July next year, so that workers on less than $37,000 a year would not pay more tax on their super than they would pay in income tax.

The Budget also makes a concerted attack on business taxes with the aim of cutting them from 30 per cent now to 25 per cent by 2026-27 — for all companies.

The process would begin with the tax on small business falling to 27.5 per cent and the turnover threshold to qualify increasing from $2 million a year to $10 million.

Mr Morrison said 370,000 businesses employing 3.4 million workers would benefit. That would include 60,000 businesses that qualified for the cut because of the higher threshold.

That threshold increase would each year – to $25 million in 2017-18 and $100 million by 2019-20, by which point, the Government estimates, the lower tax will help protect the jobs of 4.9 million workers.

The next move would be to cut tax for all companies.

The Government wants to reduce the tax concessions for wealthy superannuation account holders from July next year.

A transfer balance cap of $1.6 million will be placed on funds moved into the tax-free retirement phase. Mr Morrison said a balance of $1.6 million would produce an income stream about four times that of the single aged pension — enough to live on.

The 30 per cent tax on concessional contributions would be extended to those earning over $250,000 a year. The annual cap on concessional contributions would go to $25,000.

And from now on, there would be a lifetime non-concessional contribution cap of $500,000.

The super moves would save about $2.9 billion over four years.

An extra 1000 Tax Office specialists will be hired to make sure multinational companies pay the correct tax, a crackdown the Treasurer calculates would bring in a further $3.9 billion over four years.

And a jump in excise on tobacco would bring in a further $4.7 billion over four years.

The Budget also contained a $751 million project, over four years, to get 120,000 jobless young people the work experience training needed to find work. It will introduce a new program, to be called Youth Jobs PaTH (standing, tortuously, for Prepare, Trial, Hire).

But it will be funded by old money which currently is allocated to Work for the Dole and other employment measures.