(Bloomberg) -- Australian Prime Minister Malcolm Turnbull aims to introduce personal income tax cuts before the next federal election, due in 2019, to complement the government's drive to trim corporate rates.
The planned cuts to personal tax are contingent on the government being able to maintain its commitment to get the budget back into surplus by 2021, Turnbull told Sky News on Sunday. There's capacity to reduce both business and personal taxes, he said. “How much we can do and when we do it will depend on the budgetary circumstances, but yes the answer is we do have the ability to do it.”
The government has been pressing to reduce the corporate tax rate from 30 percent to 25 percent by the 2026-27 financial year to encourage hiring and boost wages, which remain stagnant and are restraining consumer spending. Last month, Turnbull said the government was working to ease the tax burden on middle-income Australians.
“Our intention is to introduce them before the next election,” he said Sunday, referring to the proposed personal tax cuts. “But we've got to stick to our commitment to keep getting our budget back into balance by 2021. Now we are satisfied we can do that, but ultimately all of these things are finalized in the lead-up to every budget when you have all the numbers.”
Turnbull reiterated that Australia needs to cut corporate tax rates to remain competitive with lower business rates to be introduced in the U.S.
The Australian government's argument that corporate tax cuts would spur the economy is overstated, according to former Reserve Bank of Australia Deputy Governor Stephen Grenville.
To contact the reporter on this story: Keith Gosman in Sydney at kgosman@bloomberg.net.
To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net, John McCluskey, Keith Gosman
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