Australian Treasurer Jim Chalmers called tax relief for some earners a “worthy objective,” amid criticism that planned income tax cuts next year could further fuel historically high inflation.
(Bloomberg) — Australian Treasurer Jim Chalmers called tax relief for some earners a “worthy objective,” amid criticism that planned income tax cuts next year could further fuel historically high inflation.
“We’ve always said when we can afford to give tax relief, particularly to low and middle income earners, then that’s a worthy objective,” he told ABC’s TV program Insiders on Sunday. “Governments of both persuasions have done that over time.”
Chalmers said that in principle, returning bracket creep — when inflation pushes people into a higher tax bracket — was also a “worthy objective.”
The tax cuts are not due to take effect until next year, and Chalmers said they had not been a focus of this year’s budget. But some critics have expressed concern that lowering income taxes may stoke cost-of-living pressures and put the government at odds with Australia’s central bank, which has repeatedly raised interest rates to tackle inflation.
Chalmers spoke days after Australia’s center-left Labor government released its annual budget on Tuesday, taking a path of fiscal restraint as it tries to strengthen its economic credibility and buttress the central bank’s efforts to rein in elevated inflation.
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