Coronavirus: Treasurer considers fast-tracking tax cuts after $6bn hit from Victoria lockdown

Josh Frydenberg could bring forward personal income tax cuts to boost the economy amid the Victorian lockdown.

Treasurer Josh Frydenberg has flagged bringing forward personal income tax cuts to boost the economy. Picture: AAP

Josh Frydenberg has opened the door to bringing forward personal income tax cuts to boost the economy through the Victoria-induced second wave of coronavirus.

The Victorian lockdown is set to cost the economy $6bn over the six weeks and the federal government is now working to incorporate the massive hit into its post-September plans.

The tax cuts – which are already legislated – would lift the 19 per cent tax rate‘s application from $41,000 to $45,000 and the 32.5 per cent rate from $90,000 to $120,000. This is currently due to come into force on July 1, 2022.

The Treasurer said the creation of “one big tax bracket” was already clear and cabinet will consider bringing the cuts forward in coming weeks.

“We are looking at that issue and the timing of those tax cuts,” he told ABC radio.

“We do want to boost aggregate demand, boost consumption, put more money in people‘s pockets, and that’s one way to do it.”

Mr Frydenberg is due to deliver his next economic statement on July 23, which will also outline the next phase of income support once JobKeeper and JobSeeker’s coronavirus supplement phase out in September.

“Even with the 6-week lockdown announced by Premier Andrews, that takes it (JobKeeper and JobSeeker) out to the end of August,” he told ABC News.

“There‘s going to be another phase of income support. The details of which will be announced on July 23. We recognise that some sectors are going to recover more slowly than others.

“We also recognise that the recent events in Victoria are going to be an impediment to the speed and the trajectory of the economic recovery across the nation.”