Low, middle income earners closer to getting Malcolm Turnbull’s $530 a year tax cuts after bill passed lower house
LOW and middle income earners are one step closer to getting Malcolm Turnbull’s promised $530 a year tax cuts after the bill passed the lower house. But there is still a big obstacle.
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LOW and middle income earners are one step closer to getting Malcolm Turnbull’s promised $530 a year tax cuts after the bill passed the lower house in full last night.
The personal income tax cuts will now face their next test in the Senate, where Labor and crossbench senators are urging the government to split the bill.
Labor has pledged to support the first phase of the seven-year tax package in the senate, which includes the $10 a week tax cuts for low and middle income earners.
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The party is also not ruling out backing the second phase, which would lock in the tax cut for low and middle income earners and raise the ceiling for the 32.5 per cent tax bracket from $87,000 to $90,000 initially and then to $120,000 from July 1 2022.
But the Opposition is baulking at backing the third phase, which will remove one of Australia’s tax brackets and introduce a flat tax rate of 32.5 per cent for everyone earning between $41,000 and $200,000 by 2024-25.
Crossbenchers, including One Nation leader Pauline Hanson, have also indicated they won’t support the third phase of the government’s plan.
Treasurer Scott Morrison last night revealed the first two phases of the package will cost the government about $102.35 billion over a decade, while the full plan will cost $143.95 billion.
So far, the government has indicated it won’t split the bill.
But, unless the Coalition agrees to separate the first phase from the later year changes, the government may be unable to pass the tax relief package which was its signature sweetener for Australians in the 2018 budget.
Shadow Treasurer Chris Bowen said this morning the Opposition wouldn’t rush to back the later stages of the personal income tax cuts legislation.
“There’ll be a senate inquiry into the legislation - we’ll do what a responsible alternative government does and take our time to work through those issues, which, as I remind you aren’t due to come in until 2022 to 2024. I think we have that time,” he said.
Earlier this week, the government faced a similar block on its plan to cut the company tax rate to 25 per cent when Senator Hanson withdrew One Nation’s support.
The government has struggled to secure support for the company tax cuts since 2016 and Finance Minister Mathias Cormann acknowledged this week the government may never get the backing to pass the bill.
He told Sydney radio 2GB this morning he was “bitterly disappointed” when Senator Hanson
“decided to walk away from what had been very firm commitments to support our tax plan”.
Speaking at Parliament this morning, Senator Hanson told reporters she was not going to change her mind about opposing the corporate tax cuts.
But the Senator left the door open to potentially supporting the tax rate cut for companies with a turnover of up to $500 million.
She said she would discuss the proposal, being raised by crossbench senator Derryn Hinch, with her One Nation colleagues.
The party last year backed the tax rate cut for companies with a turnover of up to $50m.
“I’m not going to stand here and make a commitment without talking to my colleagues about this and I will speak to them,” she said this morning.
“I haven’t had a chance to speak to Mathias Cormann with regards to this but as I said: they have got to prove to me and to the people of Australia that we can actually start paying down debt.
“We cannot keep allowing more and more borrowing - I’m worried about future generations.”
Prime Minister Turnbull has vowed the government will still take the business tax cuts to the next election if it cannot pass them with the current senate.
Personal income tax cuts are also set to be a key election issue if they do not pass this year, with Opposition leader Bill Shorten promising “bigger”, “better” tax relief of $928 a year or $18 a week for low and middle income earners.