Australia’s 2022-23 budget will provide petrol price relief and support first-time home buyers
In a bid to ease the pressures on Australian consumers, the upcoming 2022-23 Federal Budget is expected to include a reduction in excise duty on fuel. The temporary reduction, which is expected to last 6 months, aims to help households in the face of soaring oil prices.
Currently the excise tax is 44 cents per litre, which could result in a reduction of 10 to 20 cents per litre. This means motorists, who currently pay A$22 in excise duty for a 50-litre refill, would pay A$17 if the tax rate were reduced by 10 cents per litre.
The budget, due on Tuesday, is expected to bring cost-of-living relief to Australians. Treasurer Josh Frydenberg has denied claims that the coalition government is trying to secure an election victory from voters with the help of the budget. The Australian government agreed to the temporary reduction shortly after Chancellor Rishi Sunak announced a fuel tax cut in the UK.
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Reducing fuel taxes should revive the economy during the Russian-Ukrainian war. Despite continued global pressures, authorities are doing their best to ensure national economies do not suffer a downturn.
Reduction of excise duties on fuel before the elections
Recently, the excise duty on fuel was increased by 0.9% due to a massive rise in oil prices seen around the world. The government is expected to receive a significant boost from this tax hike in the federal budget. Critics argue that the government has decided to turn around and go in the opposite direction as the election approaches.
The abrupt reversal of the government’s decision is presented as a means of influencing voters. Some have accused the government of “pretending to care” about cost of living pressures as the election is underway. There are concerns that Australia’s high budget deficit could weigh heavily on government balance sheets in the months ahead.
Some fear that the government will raise tax rates again to finance the budget deficit, long after the election is over. Prime Minister Scott Morrison stressed that every budget taken by the government is important and not aimed at buying voters before the election. Morrison continues to cite cost of living pressures as the main factor influencing the current rate cut.
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Plans to ease the housing affordability crisis
The government should also focus on the soaring house prices that are prevalent in the country. The government’s home guarantee scheme, which allows first-time home buyers to buy property with a 5 or 2 per cent down payment, is expected to see an extension in the budget. Under the new program, 35,000 spaces per year are likely to be included in the Garantie Première Habitation program.
One-off payments for people in low-income groups are also expected to be part of the budget announcement. However, this is expected to be the last year that low- and middle-income workers will be able to claim A$1,080 in tax compensation. The government believes further relief is needed in the childcare system and in Australians’ electricity bills.
The budget is also expected to include A$18 million for transport infrastructure. This includes an AU$1 billion upgrade to the rail line between Sydney and Newcastle, AU$3 billion for key freight projects in Victoria and AU$1.6 billion for the rail extension from Brisbane to Sunshine Coast.
At the end of the line
World events have stirred the pot for Australia, leading to inflationary pressures and an increase in the cost of living. Under these pressures, some people may be forced to change their daily behavior. Although the temporary tax cut may be a political tool, it is sure to ease the pressure from the downtrodden Australian people. Many other countries could follow suit and introduce fuel tax reductions for their citizens.
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