With Australia in a recession brought on by the coronavirus pandemic, there have been suggestions, including from the government backbench, that the tax cuts be brought forward to help stimulate the economy. Federal Treasurer, Josh Frydenberg, has confirmed that this is being considered for the delayed budget. Frydenberg has argued that bringing forward the tax cuts could stimulate the economy by increasing household spending.
Despite the discussion about bringing forward the tax cuts, there are no firm proposals for when the tax cuts should be brought forward to or what stages of the cuts should be brought forward. With the Federal Budget delayed until October, the earliest the government could easily bring the tax cuts forward to would be the 1st of July 2021 (for the 2021-22 financial year).
- The benefits of bringing forward the income tax cuts would mainly go to high income taxpayers who are more likely to save the extra money or pay down debt.
- Almost none of the tax cuts would go to low income taxpayers who are more likely to spend it in their local community.
- If stage 2 of the tax cut is brought forward to 2021-22, 91% of the benefit goes to the top 20% while only 4% goes to the bottom half of taxpayers.
- If both stage 2 and 3 are brought forward to 2021-22, 79% of the benefit goes to the top 20% while only 3% goes to the bottom half of taxpayers.
- Neither option gives any tax cut to the bottom 20% of taxpayers.