Australian budget at a glance: Turnbull promises tax cuts
corporate tax reducing to 25% over 10 years;
immediate tax cut for small businesses;
increased income threshold for highest tax rate;
Google tax’ crackdown on multinational companies; and
major new infrastructure and defence spending.
The double whammy of a growth-oriented budget and a central bank interest rate cut has given the government a strong hand to wage an election.
Prime Minister Malcolm Turnbull is expected to call the July 2 election by the end of this week.
Treasurer Scott Morrison's first budget has delivered on most of the already signalled tax cuts and spending policies.
A ‘Google tax’ will close tax loopholes for multinational companies, raising $A3.9 billion to fund broader corporate tax cuts. These include lowering company taxes over 10 years from 30% to 25% and an immediate one-percentage point cut to 27.5% for small businesses.
A diverted profits tax with a 40% penalty rate will target multinational companies that attempt to shift profits offshore.
Middle-income earners will pay less tax as the income threshold is raised from $A80,000 to $A87,000 for the highest tax rate (32.5%).
This will be funded by a $A1.6 million cap on tax-free retirement savings that is expected to raise $A2.9 billion from the wealthy. The "concessional cap" – the tax-free limit for compulsory retirement savings – will be reduced from $A30,000 a year to $A25,000.
On the spending side, the government has committed to a $A50 billion spending package on infrastructure and an even bigger one of $A90 billion on defence.
On top of this, the Reserve Bank of Australia yesterday cut the official cash rate to a record low 1.75% in a bid to stimulate the economy and reduce mortgage costs.