Australia's parliament agreed Aus$158 billion (US$111 billion) in income tax cuts late Thursday, delivering the conservative government its first post-election win. The new package is set to reduce income tax in three parts. More than 10 million Australians will receive an immediate rebate of up to Aus$1,080 when they begin filing tax returns this month.
An income tax threshold increase is scheduled for 2020, while the final stage of the cuts will begin in 2024. "As a result, low and middle income earners will keep more of what they earn and have more money in their pockets," Prime Minister Scott Morrison said. "This will ultimately boost household consumption, which will be good for the overall economy," he added in a joint statement with Treasurer Josh Frydenberg and Finance Minister Mathias Cormann. The government will be banking on the tax cuts giving a much-needed cash boost to a sluggish economy battling a downturn in consumer spending.
The Reserve Bank of Australia this week cut interest rates in its second straight month to a new historic low. It cut rates by another 25 basis points to one percent, as it struggles to extend a record 28-year-run without a recession against increasing headwinds, including low wages and a housing slump.
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