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The Morrison government is moving to ease the burden of paying tax instalments for millions of Australians by suspending indexation for the 2020/21 financial year.

The change will affect instalments payable to the Australian Taxation Office for an estimated 2.2 million taxpayers paying Pay As You Go income tax instalments and around 81,000 taxpayers paying GST instalments in the next financial year.

“The decision to suspend the indexation of tax instalments is yet another tangible way the Morrison government is supporting Australians as we respond to the COVID-19 crisis,” Assistant Treasurer Michael Sukkar said in a statement on Wednesday.

Indexation is used to gauge a range of instalment amounts annually to reflect anticipated income growth.

For the purposes of calculating instalment amounts the ATO makes taxpayers pay throughout the year, it uses historical gross domestic outcomes, unlike other payments such as pensions, which are indexed against the consumer price index.

Meanwhile, a nine-week recovery in consumer confidence has come to an abrupt halt.

The weekly ANZ-Morgan consumer confidence index – delayed by a day due to this week’s Queen’s Birthday holiday – dropped 1.3 per cent.

“Last week’s fall in confidence can be seen as more of a consolidating move than weakness, as it has come after the most extended stretch of gains in the history of the weekly survey,” ANZ head of Australian economics David Plank said.

The index collapsed in late March as Australians feared the worst from the COVID-19 pandemic, but has since reclaimed much of the lost ground as the virus was contained.

Treasury secretary Steven Kennedy told a Senate committee on Tuesday the economic hit from the coronavirus will be smaller than initially expected because the health outlook has improved.

“However, this will still be the single biggest economic shock Australia has faced in living memory,” he told senators.

Having earlier predicted the unemployment rate hitting 10 per cent in the June quarter, Treasury now sees the jobless level at around eight per cent by September.

The Westpac-Melbourne Institute monthly survey of consumer sentiment is due later on Wednesday.