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Summary
- Queensland government has planned to deliver $249 million to SMEs in coronavirus related tax relief to protect businesses engaged in exposed industries amid COVID-19.
- The Australian government has intention to cut taxes, design 340k new skills training places and make investment in infrastructure to pull the economy out of the worst recession in past 3 decades.
- $158 billion due in personal income tax cuts is legislated to come into effect in mid-2022 to mid-2024 and is being considered to boost spending.
- The Morrison government has also asked for putting an end to border controls in a National Cabinet meeting by using the idea of the hotspot and implementing localised lockdowns instead of state-wide restrictions.
The Government of Queensland has planned on giving an extra $249 million from the current subsidy in coronavirus related tax relief to small and medium enterprises (SMEs) with the motive of protecting SMEs in Queensland that are currently reeling under COVID-19 impact.
Treasurer Cameron Dick stated that conditions have become better since March for some personnel and companies, as well as the economy being able to open up more due to the effective implementation of robust measures to safeguard the health of people living in Queensland. However, he asserted the need for easing the tax burden on Queensland businesses that are in unprotected industries and are going through a very difficult situation.
Queensland has announced substantial tax relief measures till now to assist businesses through COVID-19, which comprised of payroll and land tax relief and also, tax exemption for JobKeeper payments.
DO READ: Transiting from JobKeeper to JobSeeker: Morrison’s Government plan to boost employment
The Treasurer declared an array of measures to ease the tax burden for SMEs in Queensland that include the following:
- A payroll tax waiver of 2 months for businesses that have Australian taxable wages of up to $6.5 million for July and August 2020
- Continued exemption of JobKeeper wage subsidy payments from payroll tax even though the federal government has declared these payments to be eligible for income tax
- Permitting businesses to clear their current payroll tax-deferred liabilities through 2021
- Extension of current rent relief to the end of 2020 for businesses that are on rent on State Government buildings and are experiencing a discernible COVID-19 effect
The Palaszczuk government will be working with regional councils to assist them in refinancing their present debt on more beneficial terms.
Mr Cameron stated that fixed interest rate loans have soared to 8.82% at a lot of councils. Queensland Treasury Corporation could make available nearly $280 million, which equals to 5% of the total council operating expenditure across the state, with the Queensland Treasury Corporation’s 20-year loan rate of 1.92% at present. The funding is expected to be used for job-creating capital works programme by the councils across the state.
More income tax cuts ahead in the budget
The Morrison government has been considering fast-tracking income tax cuts in the upcoming budget so as to pump up flagging finances and move Australia out of its worst recession in 3 decades, as per the Treasurer Josh Frydenberg. The $158 billion in personal income tax cuts are due to come into effect by mid-2022 and mid-2024, and they are also being considered among several changes to come in the 6 October budget.
Do watch; Australia’s June Quarter GDP Slides 7%; Is Nation Entering into Recession?
Australian economy dwindled by 7% in the June quarter, which is sharpest fall in the last 61 years. During March, Treasury had contemplated a GDP plunge of above 20% and has estimated that the restrictions will bring a $12 billion hole in the September GDP numbers. About 400k Australians are expected to lose their jobs or have their hours lowered to 0 due to lockdown measures.
The Treasurer stated that the government was considering the timing of the tax cuts. Further, he has also brought forward about $100 billion worth of infrastructure investment. Tax cuts and infrastructure spending initiatives have been foreshadowed since long, but it remains unclear how steps in this direction can help the struggling services sector and the economy where household savings have climbed from 6% to 20%.
GOOD READ: Australia in recession for the first time in Three Decades; Are There Any Emerging Green Shoots?
The Australian Council for Social Service has criticised the step stating that it will not be of any advantage for the low-income workers. Cassandra Goldie, CEO of ACOSS stated that people on higher incomes have been saving due to the current uncertainty while people with lower income are left with no option, but to spend on daily essential needs to live.
PM Morrison ramping up pressure to open borders by Christmas
The National Cabinet agreed to reopen the economy through a 3-stage plan by Christmas in a meeting with state and territory leaders.
On 4 September, a definition of the hotspot was presented to the leaders, which would be used as the beginning point for devising a method to allow people to move across the country. PM Morrison stated that 7 out of the 8 states and territories had agreed to revive the economy by December 2020. However, the plan was a modification to the cabinet’s 3-step reopening plan, which had a deadline in July to ease restrictions.
GOOD READ: Reopening Economies Amid COVID-19 – Dilemma over Economy Vs Health
PM Scott Morrison was looking for support for finding replacement of state-wide restrictions with localised lockdowns by using the idea of the hotspot. Nevertheless, Western Australia was the only state to not agree with the plan, stating that border controls are crucial for the health of their people and the economy. Similarly, Queensland though agreed with the easing of restrictions by Christmas but was not comfortable with the idea of the hotspot.
The duration between now and Christmas will remain a testing time due to more people losing their jobs and income support amid winding up of the subsidy support system and re-evaluation of debts by the banks.
