Australian government plans to make income tax cuts in 2018 despite budget woes Australian government plans to make income tax cuts in 2018 despite budget woes

Australian government plans to make income tax cuts in 2018 despite budget woes
26 Jan 2018

Australian treasurer Scott Morrison is hoping to introduce personal tax cuts in 2018, even though the budget is not on track to make a surplus until mid-2021.

When giving his mid-year budget update at the Sydney Markets, Morrison forecast a deficit of AUS$23.6 billion (US$18.1 billion) for this financial year, down from a previous estimate of AUS$29.4 billion (US$22.5 billion) made in May.

According to News.com.au, he expects to see a budget surplus by mid-2021, which he believes will be larger than the previously anticipated figure of AUS$10.2 billion (US$7.98 billion).

But National Australia Bank markets chief economist Ivan Colhoun said the forecasts were not positive enough to make significant income tax cuts possible. Wage growth forecasts over the next four years were also cut.

Despite this situation, Morrison has asked opposition senators to back his government’s push to deliver further company tax cuts in early 2018.

Some AUS$2.2 billion (US$1.69 billion) in university funding cuts were included in the budget update and were roundly condemned by Labor and the Greens. But Morrison defended the decision to bring down the university loan repayment threshold to AUS$45,000 (US$35,207), arguing that a quarter of loans are never repaid and a third of degrees are never completed.

He also justified his decision to freeze university funding at 2017 levels for 24 months, accusing universities of building up treasure chests over recent years.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

Australian treasurer Scott Morrison is hoping to introduce personal tax cuts in 2018, even though the budget is not on track to make a surplus until mid-2021.

When giving his mid-year budget update at the Sydney Markets, Morrison forecast a deficit of AUS$23.6 billion (US$18.1 billion) for this financial year, down from a previous estimate of AUS$29.4 billion (US$22.5 billion) made in May.

According to News.com.au, he expects to see a budget surplus by mid-2021, which he believes will be larger than the previously anticipated figure of AUS$10.2 billion (US$7.98 billion).

But National Australia Bank markets chief economist Ivan Colhoun said the forecasts were not positive enough to make significant income tax cuts possible. Wage growth forecasts over the next four years were also cut.

Despite this situation, Morrison has asked opposition senators to back his government’s push to deliver further company tax cuts in early 2018.

Some AUS$2.2 billion (US$1.69 billion) in university funding cuts were included in the budget update and were roundly condemned by Labor and the Greens. But Morrison defended the decision to bring down the university loan repayment threshold to AUS$45,000 (US$35,207), arguing that a quarter of loans are never repaid and a third of degrees are never completed.

He also justified his decision to freeze university funding at 2017 levels for 24 months, accusing universities of building up treasure chests over recent years.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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