The tax offset for low and middle income earners (LMITO) will not be extended beyond this financial year, so does this amount to a tax increase for these people?
Treasurer Josh Frydenberg tells the podcast the offset was a “temporary measure” that was extended as fiscal stimulus, due to the pressures on the budget from COVID. It’s being removed “now that the economy is normalising”.
With unemployment set to fall below 4%, Frydenberg also says “what we think is going to happen is upward pressure on wages”.
Annual wage growth is at 2.3% but Frydenberg says there’s a “broader indicator of earnings across the economy [Average Earnings in the National Accounts (AENA)] which has been higher than where the wage price index is. It’s expected to get to 5% this year, which is above where inflation is at. That’s a broader earnings indicator, which takes into account bonuses, promotions, people moving jobs and the like.”
The treasurer, who holds the Victorian seat of Kooyong, is one of the Liberal members being targeted by “teal” independent candidates running on issues such as climate and the need for a federal integrity commission.
Frydenberg – who is more popular than Scott Morrison in the “leafy” seats – will be used to campaign where these candidates are strong. “I will give as much support as I can to my colleagues who face those opponents.”