Australian treasurer says no 'mammoth' tax cuts in the coming budget

Australian treasurer says no 'mammoth' tax cuts in the coming budget

CANBERRA, May 8 (Reuters) - Australia's centre-right government is expected to announce hefty health and infrastructure spending and deliver some voter-sweetening tax cuts in an annual budget on Tuesday that unofficially kicks off campaigning for elections next year.

Data on Monday showed business conditions are at their highest level in over 20 years.

However, the ANZ job advertising series, a key pointer to future employment, fell for a third consecutive month in April at a time when jobs growth has already come off the boil.

However, the treasurer has already conceded they won't be "mammoth". He has argued the cut is needed to keep Australia competitive for investors, but the opposition Labor Party has said it's a meaningless "zombie cut" without parliamentary support.

A hike in the current offset from $445 to $1000 however, when coupled with a steeper phase out rate for the benefit, would see the refund fade out to nothing just as an individual's taxable income reaches $87,000 - the second highest marginal tax bracket.

Currently, the Low Income Tax Offset expires for those earning $66,667 but this is expected to be lifted to about $125,000, with the amount paid decreasing by about 1.5¢ a dollar once a worker earns more than $90,000 a year.

The 23.9 per cent tax-to-gross domestic product limit will be written into the rules for the budget.

'It's about the same as it was when I became treasurer, he said.

"What the government seems to be proposing to do is to give tax cuts on the back of a temporary spike in revenue, as well as some likely very optimistic projections about wages and other things in the budget to give permanent tax cuts off the back of that".

He warned Australia was more vulnerable to a global economic downturn, compared to 2008 when it was in the best position of all western countries with no debt and triple-A credit rating.

Speculation is also growing that recent growth in government coffers, largely from company taxes, will let the Liberal-National coalition fulfil its promise of returning the finances to surplus a year earlier than planned.

Net debt is seen blowing out as the government is expected to spend around A$24 billion on national infrastructure over the next 10 years, several economists said.

Sticking to the long-standing surplus commitment for 2020/21, they calculate fiscal policy may add 0.1 percentage point to growth this year and 0.2 percentage points in the next.



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