A television advertising campaign endorsed by former Reserve Bank officials and senior bureaucrats oppose another round of tax cuts as the government finalises its October 6 budget.
Mr Frydenberg has hinted at delivering tax cuts to put “more money into people’s pockets” as a way of increasing consumer spending to restart the economy.
However, critics of the proposed tax cuts, including former Reserve Bank governor Bernie Fraser, said tax cuts would not benefit the national economy as wealthier Australians will bank the additional cash.
“The unfolding COVID pandemic is a stark reminder to all policymakers of two fundamental truths: that while many of us work and spend in economies, we all live and die in communities, and, secondly, the most vulnerable groups in those communities are always hit the hardest in major crises like this pandemic,” Mr Fraser said.
Former Liberal opposition leader John Hewson was also critical of Mr Morrison’s tax proposal.
“The LNP naively hopes tax cuts are good politics, but they won’t be as they increase inequality and fail to ensure job security and increasing wages with our economy still struggling to exit recession,” Mr Hewson said.
The advertising campaign points out that lower-income earners are more likely to spend additional benefits, which will help get the economy out of its first recession in nearly three decades.
“More tax cuts today mean service cuts tomorrow,” said Cassandra Goldie, CEO of ACOSS.
The next stage of legislated tax cuts costs $12 billion a year and reduces tax for people on $130,000 or more by $47 per week. Most low and middle-income earners get nothing. Yet it’s only low-income earners that will spend most of any government stimulus. Instead, it’s time to #RaisetheRateforGood by permanently increasing JobSeeker payment,” she said.
The advertisement builds on The Australia Institute’s research, which shows the tax cuts will not boost the economy and will widen inequality in Australia.
“Cutting taxes for already wealthy Australians will undermine the long-term strength of our public services, like healthcare and education, while doing very little to stimulate economic growth,” said Ben Oquist, executive director of The Australia Institute.
“Tax is an investment in our society. Those calling for tax cuts today will be calling for service cuts in the future.”
The Coalition’s stage 3 pay cuts follow the first round which has delivered $1,080 in tax relief for average income earners last year.
Stage 2 has previously been legislated to come in 2022 and would cut taxes for people earning more than $90,000 a year as well as raising the threshold on the lowest tax rate.
The final stage was due to come into effect in 2024, which will see a flattening of the tax bracket, with Australians earning $200,000 a year or less paying no more than 30 cents in a dollar in taxation.
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