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Highlights
The federal budget, due Tuesday, is expected to include a fuel excise cut for Australians.
The budget is expected to focus on easing the cost of living pressures and housing affordability.
Critics argue that the government support measures in the budget are targeted to lure voters ahead of elections.
In a bid to lift pressures off Australian consumers, the upcoming federal budget 2022-23 is expected to include a cut in fuel excise. The temporary cut, which is likely to remain for 6 months, is targeted at helping households with soaring oil prices.
Currently, the excise tax stands at 44 cents per litre, which could see a cut of 10 to 20 cents per litre. It means motorists, who currently pay AU$22 in excise for a 50-litre refill, would be paying AU$17 if the tax rate is cut by 10 cents per litre.
The budget, due Tuesday, is anticipated to deliver cost of living relief to Aussies. Treasurer Josh Frydenberg has denied the claims that the Coalition government is trying to secure an election win from voters with the help of the budget. The Australian government has agreed on the temporary cut shortly after Chancellor Rishi Sunak announced a fuel tax cut in the UK.
RELATED READ: Key takeaways for Australia from UK's tax and fuel duty cuts
The tax cut on fuel is likely to uplift the economy during the prevailing Russia-Ukraine war. Despite ongoing global pressures, authorities are doing their best to ensure that domestic economies do not suffer a slowdown.
Fuel excise cut ahead of elections
Recently, the fuel excise was increased by 0.9% due to a massive uptick in oil prices seen across the globe. The government is expected to receive a sizeable boost from this tax hike in the federal budget. Critics argue that the government has decided to take a U-turn and move in the opposite direction as elections are around the corner.
The sharp turnaround in the government’s decision is being touted as a move to influence voters. Some have accused the government of “pretending to care” about the cost of living pressures as elections are underway. Concerns loom that Australia’s high budget deficit could weigh heavily on the government’s balance sheets in the coming months.
Some fear that the government might increase tax rates once again to finance the budget deficit, long after elections are completed. PM Scott Morrison highlighted that each budget taken by the government is important and not focused on buying voters ahead of elections. Mr Morrison continues to cite that cost of living pressures are the major factor influencing the current rate cut.
ALSO READ: Boost to Australian travel industry: New AU$60m funding, Return of travel vouchers
Plans to ease housing affordability crisis
The government is also anticipated to focus on skyrocketing housing prices prevailing in the country. The government’s home guarantee scheme, which allows first home buyers to purchase a property with either a 5 or 2% deposit, is set to see an extension in the budget. As a part of the new program, 35,000 places per year are likely to be included under the First Home Guarantee scheme.
One-off payments for people of lower-income groups are also set to be a part of the budget announcement. However, this is expected to be the last year when low- and middle-income workers would be able to claim AU$1080 in a tax offset. The government believes that more relief is needed in the childcare system and in the power bills of Aussies.
The budget is further likely to include AU$18 million for transport infrastructure. This includes an AU$1 billion upgrade to the train line between Sydney and Newcastle, AU$3 billion for key freight projects in Victoria and AU$1.6 billion for the Brisbane to Sunshine Coast rail extension.
Bottom line
Global events have stirred the pot for Australia, leading to inflationary pressures and higher living costs. Under these pressures, some people might be forced to change their everyday behaviour. While the temporary tax cut may be a political tool, it is sure to ease off some pressure from the suppressed Australian population. Many other nations could follow suit and introduce fuel tax cuts for their citizens.
GOOD READ: Impact of COVID-19 on Australian property market: Six points to note
