The Liberal Party handed down its 2019-2020 budget yesterday, outlining several key measures that will impact the retail sector.
The first proposed measure builds on the personal income tax plan, with the government announcing that instant tax relief will be provided to low- and middle-income earners.
People earning up to $126,000 per year – approximately 70 per cent of Aussie taxpayers – will recieve some extra cash when they file their tax return (if the budget passes), with singles able to snag up to $1080 and dual income families able to get up to $2160.
Executive director of the Australian Retailers Association (ARA), Russel Zimmerman, said that this extra money will help to boost the confidence of Australian consumers.
"The government’s move to raise the tax offset for PAYG taxpayers, putting up to $1,080 in the pockets of singles and up to $2,160 for dual-income families – increasing actual purchasing power – means Australians can spend with confidence, delivering a boost to local businesses.
"Given taxpayers will have this cash as soon as July if their tax returns are complete, this represents a substantial and almost immediate boost to retail spending across the economy," he said.
However, some business commentators are saying this cash will provide a quick sugar hit to the secotr and will dwindle quickly.
The government does have longer term plans for tax, looking to reduce the most common tax rate from 32.5 per cent to 30 per cent for those earning between $45,000 and $200,000, meaning that consumers would be paying less tax and have more discretionary cash. However, these changes aren't set to be implemented until 2024.
Also playing into consumer's discretionary spend, is the energy measure, which is set to help Australians pay their power bills. The government will provide $284 million for a one-off, income tax exempt payment to nearly four million Aussies to assist with their power bills and cost of living expenses. This payment, again, helps consumers retain money in their pockets, giving them the confidence to spend.
Next, the government has outlined a plan to back small and medium businesses – those turning over less than $50 million per year – by proposing a cut to the company tax rate, lowering it to 27.5 per cent. The government plans to lower this to 25 per cent by 2021-22.
The government also plans to increase the instant asset write-off threshold for from $25,000 to $30,000 for businesses turning over less than $50 million a year, meaning that companies will be able to reinvest in their businesses, employ more workers and ultimately, grow the business.
Zimmerman said this measure will help retailers modernise their business and help them to remain competitive.
"In a rapidly evolving environment compounded by challenges from online overseas retailers, high energy prices and uncertain economic conditions, this will help Australian retailers modernise and update to ensure they are well equipped to compete and grow,” he said.
To read an overview of the Liberal Party's 2019-2020 budget, click here.