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Australian govn't unveils new budget targeting "job, growth"

Xinhua, May 3, 2016 Adjust font size:

Australian Treasurer Scott Morrison unveiled the government's 2016-17 budget, which will see the deficit reaching 37.1 billion AU dollars (28 billion U.S. dollars) after topping at 39.9 billion (30 billion U.S. dollars) in 2015-16.

The 37.1 billion deficit estimation for year 2016-17 is much higher than the 25.8 billion deficit in last year's budget, which was delivered by Morrison's predecessor Joe Hockey under the leadership of previous Prime Minister Tony Abbott.

Morrison said the government is only expected to reduce the deficit to 6 billion AU dollars (4.5 billion U.S. dollars) in 2019-20 financial year.

The government expected Australia's economy to grow by 2.5 percent while keeping the unemployment at 5.5 percent and inflation at 2 percent in 2016-17.

Morrison said this budget is about "job and growth". One of the most important measure to stimulate growth is the tax relief for small business and raising of personal income tax threshold.

The small business tax rate, which was lowered in Joe Hockey's 2015 budget, will go down a further point to 27.5 percent with the tax eligibility turnover threshold increased from 2 million to 10 million AU dollars (1.5 million to 7.5 million U.S. dollars).

From July 1, meaning the threshold for paying the 37 percent middle-income tax will be raised from 80,000 to 87,000 AU dollars. Around half a million workers will benefit from this tax break.

The government has aimed at multinational companies for more income. The new Australian Tax Office taskforce will crackdown on tax avoidance by multinational companies and raise 3.7 billion AU dollars (2.8 billion U.S. dollars) by 2020.

Wealthy retirees became a surprised target in this budget. Their tax-free superannuation accounts will be capped at 1.6 million AU dollars (1.21 billion U.S. dollars).

"The transfer balance cap will be applied to both current retirees and to individuals yet to enter their retirement phase," Morrison told Parliament.

He argued the measures would affect fewer than 1 percent of superannuation fund members, and would earn 2 billion (1.5 billion U.S. dollars) over three years.

Smokers will have to pay more as the annual 12.5 percent tobacco tax increase is expected to continue to 2021.

The government also promised to spend 50 billion dollars (37.8 billion U.S. dollars) in infrastructure including metros in Sydney and Melbourne and country rails.

The budget is also committed to support hospitals and schools and the National Disability Insurance Scheme.

Earlier on Tuesday afternoon, the Reserve Bank of Australia (RBA), the country's central bank, lowered the cash rate by 25 basis points to a record low of 1.75 percent for fear of deflation.

Compared to RBA's bold move, the budget was considered to be "nip and tuck" and not enough to boost the economic growth.

As the federal election being only nine weeks away, the government is believed to make a safe choice by walking a middle line. Endit