A tax cut of $ 2,160, for all employees with average incomes, according to experts, could be the main reason for the economy to emerge from the recession, caused by the corona pandemic.
The chief economist of the investment house “AMP Capital”, Dr. Shane Oliver, believes that the tax reliefs were moved from July 2022 to July 2020 in order to encourage consumption. This will leave more funds available to citizens, after paying off loans and other living expenses.
Faster repayment of mortgages, according to him, will also reduce the risk of the impossibility of “servicing” debts. In addition, it will bring consumption growth in the coming years.
With the October budget, the reliefs given two years earlier led to a tax reduction of 17.8 billion dollars, which according to the plan from 2019, should have happened only in July 2022.
The Australian with an average salary, and full-time, has an annual salary of 89,123 dollars, and will receive 2,160 dollars in tax cuts as part of the state plan, intended for 11 million employees.
According to Dr. Oliver, although part of the money from the tax payment will be saved, at least one third will still be spent, which will help the economy in the short term.
One month after the announcement of the budget, on October 6, there was a sharp increase in retail sales, rising by as much as 7.1 percent in November after the end of the three-month restrictions in Melbourne.
Data from the Australian Bureau of Statistics recorded the second largest monthly growth in consumption, after an increase of 16.9 percent in May, which followed a record drop in consumption of 17.7 percent in April.
– We have seen the return of economic activity throughout the country, which can be seen on the basis of published data on the growth of consumption – said the economist.
With interest rates already at record lows (0.1 percent9), tax cuts should boost economic activity, and low- and middle-income Ozis, earning between $ 40,000 and $ 60,000, should count on a tax refund of $ 1,060.
Employees earning between 60,000 and 100,000 have a return of $ 2,160, and employees whose salary is over 100,000 have a return of $ 2,445.
The tax cut from July 1, 2020, also meant raising the marginal tax rate, from 32.5 percent, from $ 90,000 to $ 120,000, and the tax rate from 19 percent, from $ 37,000 to $ 45,000.
Treasurer Josh Freidenberg told Parliament last year that tax cuts were aimed at preventing the economic crisis.
– The Great Depression and the two world wars did not bring Australia to its knees, so there will be no pandemic – said Freidenberg on that occasion.
The Australian economy was in recession during the first half of 2020, with the economy falling by a record seven percent in the June quarter.
Subsidies for the JobKeeper program, which amount to $ 1,000 for two weeks (if you work 20 or more hours a week), end on March 28.
Automatic tax refund
Taxpayers will receive relief after submitting tax returns for the period 2020/21 from July this year.
This means that all employees with an annual income of more than $ 40,000 will receive an appropriate tax refund, automatically as part of filing a tax return, regardless of other benefits.
Taxable Income Refund
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