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Are We Heading for a Perfect Storm?

Mike King
October 2, 2012

SYDNEY -- Households will need to get ready for a decade of lower incomes, higher taxes, and fewer tax breaks, according to noted economist Ross Garnaut, distinguished professor of economics at the Australian National University.

Garnaut has warned of a long and tough China-induced downturn in Australia that will require restraint in government spending and wages growth for the rest of the decade, according to today's Australian Financial Review.

arnaut believes tax cuts and benefits introduced since 2004 would need to be reconsidered, and that older people who had become used to virtually no taxation may be faced with having to pay taxes.

If he is correct, we may see the government forced to increase taxes and cut spending for several years. Tax breaks for superannuation could be wound back, causing more retirees forced to pay taxes, while companies could see an increase in company ta