The measure has the backing of the Reserve Bank of Australia which has made it clear that the government should initiate action to boost consumer spending.
On Thursday, in a significant development, Australia’s conservative government is on the verge of securing support to pass $110.47 billion (A$158 billion) in tax cuts over the next decade.
Although the tax cut plan sailed through Australia’s lower house of parliament on Tuesday, the government still needs the support of several independents and minor parties for it so sail through the upper house Senate, where it does not have a majority.
Following days of negotiations, 3 independent lawmakers have said they would back the legislation when it came to a vote on Thursday.
“We’re going to have a bunch of people, hardworking Australians, that get a tax cut,” said Senator Rex Patrick to the Australian Broadcasting Corporation Radio.
If the bill becomes law, nearly 10 million middle- and low-income earners will receive a rebate worth up to A$1,080 within a week.
The proposal comes as a relief to Australia’s central bank, which stated government action was required to boost consumer spending. The Australian is growing at its slowest pace in a decade and the government has to undertake measure to boost it.
According to economists, the tax breaks are likely to inject nearly A$7.5 billion into the economy over 2019/20, which should be music to the Reserve Bank of Australia (RBA).
On Tuesday, the RBA had cut interest rates for the second time in two months.
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