Low & Middle Income earners-October Budget 2022

Low Income Workers-hit harder by October 2022 Budget:

The Albanese government will not extend the low and middle income tax offset (LMITO), meaning workers earning less than $126,000 will not get a tax break, worth up to $1,500, beyond 2022.

Treasury forecasts for the 25 October budget also predict inflation will be higher, for longer. Inflation will peak in the December quarter, as expected, at just under 8%, but officials now expect Australia’s cost of living squeeze will be more protracted, largely because of the spike in power bills.

Treasurer Jim Chalmers has been signalling for weeks that fiscal and monetary policy needed to be in alignment to help subdue inflationary pressure in the economy.

The government had no plans to respond to cost of living pressures by extending the Morrison government’s tax offset for low and middle income earners, or with one-off cash payments to help cover grocery or energy bills.

Ahead of delivering its first budget, the Albanese government confirmed this week the National Disability Insurance Scheme was forecast to cost $8.8bn more than expected across the forward estimates. That signature scheme was now forecast to cost more than $50bn a year by 2025-26.

While inflationary pressure would remain front-and-centre for households and businesses, higher commodity prices and historically low unemployment levels will deliver the Albanese government a revenue boon over the next two years.

The forecast for tax receipts on Tuesday night will be revised up by more than $100bn over the forward estimates. But Treasury expects that windfall to be short lived.

Two-thirds of the forecast revenue upgrades were concentrated in the first two years of the forward estimates, which was 2022-23 and 2023-24

Managing Director

Northcityaccountants.com.au

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