Gilbert + Tobin tax experts analyse what the key measures unveiled in the 2020/2021 Federal Budget will mean for business and the economy.
Announcing a nearly $100 billion spending splurge in the 2020 Budget, it’s clear the Government is banking on debt to rebuild the economy, reduce the unemployment rate and pull Australia out of the deepest recession its faced since the 1930’s.
Gilbert + Tobin’s tax experts have provided a detailed analysis of the key measures unveiled in the 2020 budget and whether it will be the lifeline business and Australians needs to overcome this once-in-a-century economic crisis brought on by the COVID-19 pandemic.
Much needed and whole-scale reform of the tax system has been left off the table in favour of tax cuts and represents a missed opportunity to rebalance government revenue. Unlike last year’s electioneering Budget ‘surprises’, talk of surpluses has all but disappeared from the Coalition’s fiscal playbook in 2020.
G+T Tax Partner Muhunthan Kanagaratnam believes the question to be answered now is how effective will these measures be. Optimism is already evident in the Government’s forecasts of growth and employment:
- A turnaround of 8% in economic growth in the space of two calendar years (a fall of 3.75% this calendar year followed by growth of 4.25% next calendar year); and
- Unemployment peaking at 8% in December 2020 (note this is before JobKeeper runs out in March 2021) and dropping to 6.5% by June 2022.
“Forecasts are just that and the pandemic showing no signs of slowing its spread. We wait to see just what impact prolonged border closures and end of JobKeeper will have on this optimism. Just as importantly, the Morrison Government will need to be wary that the ‘debt + spending = jobs’ approach they are relying on does not result in an uncontrolled overheating of the economy.” said Kangaratnam
A full breakdown of Gilbert + Tobin’s Analysis of the 2020/2021 Federal Budget is available on our website.
G+T Partner, Muhunthan Kanagaratnam is available to for any further information regarding on our analysis and to provide commentary for any stories you are working on.