Tax increase under Albanese government possible, urges Treasury secretary Dr Steven Kennedy
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New pressure to raise taxes as top economic adviser Anthony Albanese warns of ‘profound’ fiscal pressures
- There is a threat of great budget pressure and higher taxes are now looming
- War in Ukraine, budget under pressure from Covid, but Australia is better off than many countries
- Treasury supports government action to control energy prices
Taxes will rise under Anthony Albanese’s government if she follows the advice of her own top officials.
Minister of Finance Dr. Steven Kennedy has urged Albanians to raise taxes and cut spending to counter looming ‘deep’ budgetary pressures.
Kennedy said in a statement to the Economics Legislation Committee on Tuesday that the war in Ukraine and the Covid pandemic are the two major factors that have squeezed the budget.
His comments come at a time when food and energy prices are skyrocketing across the country.
The Minister of Finance, Dr. Steven Kennedy, has urged Anthony Albanese to raise taxes and cut spending to counter the “deep” fiscal pressures on the horizon.
The war in Ukraine has put pressure on the global economy and had also put pressure on the Australian economy
While the October budget has “significantly reduced short-term deficits and debts,” the government’s wallets are under increasing pressure.
An increase in taxes is a lever that Mr Abanese may need to use, despite Australia’s lower debt ratio as a percentage of GDP than many other countries.
“In the short term, fiscal pressures are greater and will likely require a combination of spending restraint and tax increases to reduce deficits and lower debt,” said Dr. Kennedy.
“Higher borrowing costs and lower nominal GDP growth forecasts in the October budget mean that more active fiscal recovery is needed to stabilize debt-to-GDP in a timely manner.”
The October budget forecast that electricity prices for Australian consumers would rise by up to 56 percent over the next two years
Higher energy prices have impacted supermarket prices in Australia
The bureaucrat noted that the global economic outlook has deteriorated since April, adding that it is now it is becoming increasingly likely that ‘major developed economies’ will experience recessions.
The main causes, he said, were “pandemic and war.”
“One of the effects of Russia’s unjust war against Ukraine is being conveyed through higher energy and food prices,” said Dr. Kennedy.
International gas prices rose by more than 600 percent between March 2021 and September 2022, he said.
This has increased cost of living pressures for Australian consumers – and people around the world.
Coal prices have also risen 400 percent, he said.
The October budget forecast that electricity prices for Australian consumers would rise by 56 percent over the next two years.
Kennedy said the Treasury Department supports “direct” government intervention in energy prices.
“The circumstances of war-induced price shocks are different and beyond the scope of such an approach. In our view, such shocks involve government intervention,” he said.