Treasurer Josh Frydenberg says there is no way a six-month 22c tax cut to petrol – that’s come at a cost of $3bn – will be extended if he wins the election.
Giving his National Press Club address the day after handing down his fourth budget, Mr Frydenberg pointed blame for the rising cost of living on supply chain disruptions from Covid and the war in Ukraine.
To ease this pressure, people earning under $126,000 will get an extra $420 back in their tax after July 1 and the fuel excise on petrol will be cut in half for six months.
Mr Frydenberg was asked whether he would extend this fuel tax cut if the price of oil didn’t drop as forecast in the budget by September 28 and the Coalition won the election.
“We’ve been very clear, it’s only six months,” he said.
“Other countries have done it for different periods, for example New Zealand did it for three months, countries in Europe did it for four or five months.
“We have done it for six months, just above 22 cents a litre, this is a $3bn hit to the budget bottom line.”
But Mr Frydenberg said Treasury told him the fuel excise cut would reduce inflation by 0.25 per cent.
“The reason we took this step is because the cost of living pressures are real,” he said.
“Fuel prices are particularly high, and Treasury have forecast that the price of a barrel of oil will come down to $100 by the end of the September period.
“So the legislation will be very clear … it won’t be extended.”
Mr Frydenberg also denied he was effectively increasing taxes on 10 million Australians despite the costing of living continuing to rise and middle income earners only getting $1500 in tax relief this year, but nothing the next.
Mr Frydenberg said that the $1080 low-to-middle income tax offset (LMITO), which was introduced in 2018, had only been extended due to the Covid pandemic.
“It was never meant to be a permanent feature of the tax system,” he said.
He pointed to stage three tax cuts due to kick in 2024/25 which will involve everyone earning between $45,000 and $200,000 paying 30 per cent in tax.
That means removing the 37 per cent bracket for those earning more than $120,000.
“(It’s) a much fairer and simpler tax system,” he said.
