Economists at the Commonwealth and Westpac banks are urging Treasurer Josh Frydenberg to bring forward already legislated tax cuts to boost the economy.Credit:Alex Ellinghausen
The government's first action on its re-election was to put in place its $158 billion,seven-year tax plan. The second stage does not start until 2022-23 when the 19 per cent tax rate threshold will lift to $45,000 while the 32.5 per cent rate threshold will go to $120,000.
At the time,the government believed the economy would be much stronger with unemployment lower and wages picking up. But since then the Reserve Bank has slashed official interest rates while consumer spending has been stagnant.
The Federal Chamber of Automotive Industries on Wednesday reported new car sales in October were down 9.1 per cent on the same period last year. It was the worst October for sales since 2010.
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Westpac chief economist Bill Evans said it was clear from the most recent retail trade figures,which showed the actual volume of goods falling at the fastest rate since the 1990-91 recession,that the economy needed government assistance.
He said the economy would not grow fast enough just on the back of lower interest rates,arguing fiscal policy had to deliver a boost to consumers and businesses now.
Mr Evans said the government could maintain its budget surplus by phasing-in the second tranche of tax cuts over the next two years in a move that would inject around $7 billion a year into the economy.