Tony Greco said the design of LMITO means it won’t hit people’s pockets until July 2023 at the earliest and as it is not built into PAYG it will only get paid when individuals lodge their 2023 year’s tax return.
“That is from July 1, 2023 at the earliest depending on when an eligible individual lodges their return,” he said.
“[So the question is) will we need Government stimulus in the second half of next year?
“If Treasury thinks the economy and households will still need a boost in the second half of 2023 it would be good to know what modelling or assumptions are being used as the basis for that advice.
“The Government has rolled out over $300 billion in stimulus to keep the economy strong during this pandemic. Looking at the fundamentals there is no denying that it has worked. When will the tax reform journey start if we keep kicking the can down the road?”
The debate over the scrapping of the LMITO has heated up in the past two days as more organisations voice their concerns over the inequality of government’s move to instead phase in stage 3 tax cuts.
According to the Australia Institute policy think tank, the stage 3 tax cuts were not due to begin until 2024-25 and will mostly cut the taxes of people on high incomes.
“The net effect of the two tax changes will be that the two thirds of taxpayers on less than $90,000 a year are worse off, while the third of taxpayers on more than $90,000 a year are better off,” said Matt Grudnoff, senior economist at the Australia Institute.
“The stage three income tax cuts will provide the biggest benefits to those who need them the least. While the benefits of a strong tax base are obvious, it’s time for a robust national debate about whether we want the tax system to make Australia more equal or less equal as Australians emerge from the pandemic.”
Tax advisory firm BDO said a tax review is needed in a modern and digitised economy.
“We should expect all carrot and no stick for the masses,” BDO tax partner Mark Molesworth said of the upcoming 2022 budget.
“All-in-all we expect this budget to be like many of its predecessors.
“It will bring forward narrowly focused, piecemeal tax announcements and put big-picture, economy-enhancing tax reform measures off to another day.”
