Moody Kiddell and Partners provides information on the first budget of the new federal Labour government. In these times of increasing rates and cost of operating a business it is important to understand what is in the budget for a business.
As promised in the lead to the election, the tax cuts that have been put in place from July 2008 are:
- 0-$6000 will not be taxed at all
- $6,001-$34,000 will be taxed at 15%
- $34,001-$80,000 will be taxed at 30%
- $80,001-$180,000 will be taxed at 40%
- $180K + taxed at the top rate of 45%
The benefits in the above are two fold, the rate of tax has decreased and the brackets have also increased meaning that people will be taxed at lower rates.
There will be further changes in July 2010 with the income brackets increasing again for several tax payers.
The other highlight of the election that has been widely publicised is the budget surplus being at a record high of $21.7bn that is set to increase to over the coming year. These surplus funds that is essentially all of the tax payers money is being set aside into various funds for future education, infrastructure, health and the future fund.
The reason why the money is being out aside and not spent now to improve these areas is the concern that increased government spending would continue to push up inflation that is causing the increase in rates and further pain to home owners and renters.
The government is setting for a growth figure for the economy at 2.75% for the financial year 08/09 a moderate figure and decrease from the previous years.
The benefits of the budget includes the increase in spending in the following areas:
- $100 million for the Ballina bypass
- $15 million for the Bulahdela bypass
- $13 million to build the Alstonville bypass
- $3 million for the Grain rail task force
- $20 million for upgrade of the Great Western Highway.
- $576 million to improve 8134 of road and rail on the National Land Transport Network
Along with these projects that have been a federal initiative, the NSW state government will increase the infrastructure spending to $57.6bn over the next four years, an increase of 11 per cent.
Therefore, the government is doing what they believe is ideal to keep inflationary pressures low while trying to increase spending responsibly and improving the areas that are in desperate need for improvement.
The contractors staying close to local councils and governments will do well from this increased spending over the next four years.
In summary the budget has been viewed as being responsible and inline with what most business’ were wanting. Ideally inflation can be controlled and rates can be maintained with a steady growth in the economy for long term sustained growth.