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In the run-up to the October budget a couple of issues loom as challenges for the government.
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Two tax hangovers ‘could be stumbling blocks’ for Labor
27 May 2022
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Hangovers from the previous government could be stumbling blocks for Labor, said Scott Treatt and Robyn Jacobson of the Tax Institute on this week’s Accountants Daily podcast.
Mr Treatt, who is head of tax policy and advocacy at TI, said putting major tax reform on the agenda was a challenge and one “classic example” of traditional thinking was the fuel excise reduction in the March budget.
“Imagine reform that actually dealt with that with a future vision instead of going, ‘Oh, actually, let's just revert it back up to deal with what we've always done in the past’,” he said.
Senior advocate at the Tax Institute Ms Jacobson said this would come up as an issue just before Labor’s first budget.
“After the 28 September, the temporary reduction in the fuel excise is going to jump up by 22.1c. So it’s effectively going to double,” she said.
“This is going to be a very visible form of price increase as we all drive around the suburbs and see this advertised at every service station.
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“So this is something for the government to consider – would it need to be extended by any stretch, would it need to be continued for a period of time maybe at a lesser rate?
“But they’re going to have to think through the implications, because politically, that’s going to feed through to every mode of transport that uses that fuel, which in turn feeds through all the goods and services and supermarket prices.”
She said cost-of-living pressures might also force the government to revisit the low and middle income tax offset (LMITO), which was about to be discontinued.
“We know that the government is going to be supporting the stage three income tax cuts – they were all legislated a number of years ago. More than 9 million Australians are going to benefit from that,” she said.
“But it will be an interesting question whether the ALP would question the settings of the LMITO. It is intended to conclude at the end of this income year and still be claimed, of course, in 2022 tax returns. But given the cost of living pressures, there may be some questions asked at the ALP whether, in fact, that would continue.
“It’s something the government would need to consider.”
The latest Accountants Daily podcast will be available on the website from Friday (27 May) afternoon.
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