Australian Treasurer Says Income Tax Cuts Well Timed for Economy

By James Glynn

SYDNEY--Income tax cuts for all Australian workers from this month are well timed for the economy, Treasurer Jim Chalmers said in a radio interview with the Australian Broadcasting Corp. on Monday.

Despite heightened concerns that inflation in Australia remains too high and that interest rates will need to rise further, Chalmers said the tax cuts are arriving "at precisely the right time."

The income tax cuts are being rolled out as the government is also handing out 300 Australian dollars (US$200) for every household to offset cost of living increases, while extending rebates to help offset the cost of rising rents and electricity bills.

Economists say the rebates will help to lower headline inflation, but core inflation, which the RBA watches closely, will remain elevated.

Combined with news last week that inflation remained too high in May, some economists are warning the added stimulus may drive interest rates higher, with the next hike potentially coming as early as August.

Inflation is higher than anyone would like to see, "but it's much lower than when we came to office," Chalmers said.

"The government's policies in areas like energy bill relief, cheaper early childhood education, rent assistance, are not harming the fight against inflation," he added.

Write to James Glynn at [e-mail]

(END) Dow Jones Newswires

06-30-24 2103ET