Labor’s tax policies would cost Australian economy at least $167 billion

LABOR’S big six tax policies would cost the economy at least $167 billion — with families and small business to bear the brunt of a decade of hip-pocket pain, according to new economic modelling.

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FAMILIES and small businesses would feel the brunt of a $167 billion tax hit from a Bill Shorten Labor government, according to new modelling.

Treasurer Scott Morrison seized on the figures as proof of Labor’s plan for an “unprecedented tax grab” — labelling it “the politics of envy” which would fail to lift wages.

The Parliamentary Budget Office and Treasury conducted independent modelling of Labor’s tax plans, including its opposition to business tax cuts, move to scrap negative gearing and plans to increase capital gains taxes and change family trusts.

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Taxpayers would also be hit by a $22 billion increase to the top marginal tax rate through the extension of a budget repair levy, which expired this year, and $20 billion from Labor’s opposition­ to superannuation changes.

The figures come as the Turnbull government is preparing this week to put its business tax cuts back on the agenda after a damaging internal row over same-sex marriage.

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Mr Morrison’s plan would cut the tax rate of all companies to 25 per cent over a decade but Labor opposes this. The modelling shows Labor’s plan would cost businesses $65 billion, assum­ing the Liberal government passes its entire tax cut and that Mr Shorten would roll it back entirely.

“Labor is dumping more than $150 billion worth of taxes on the shoulders of Australian families with a six-shooting tax blast that will bring our economy to a standstill and put further pressure on household budgets,” Mr Morrison said.

Under Mr Shorten, taxpayers would also be hit by a $22 billion increase to the top marginal tax rate.

Treasurer Scott Morrison was quick to jump on the costing data. Picture: Kym Smith

“Everyone is in the sights of Labor’s unprecedented tax grab — families, singles, retirees and small business owners. This is the grim reality of a Labor government led by Bill Shorten: tax upon tax upon tax to pay for Labor’s insatiable appetite to spend other people’s money.

“Higher taxes don’t increase your wage … that is a flat earth argument that will penalise Australian families and whack small businesses.”

Labor has unveiled its tax policies over more than a year, with Mr Shorten announcing changes to restrict negative gearing to new houses early last year.

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Mr Shorten last month said a Labor government would change family trusts to put a 30 per cent floor on tax, which will prevent users of trusts escape paying tax by splitting them between family members. Labor said it would affect only 2 per cent of taxpayers, or about 315,000 trusts.

The 10-year modelling shows a $32 billion tax hit from restrictions on negative gearing, $13 billion from capital gains tax increases, and $15 billion from family trust changes.

But Labor also wants to exempt workers earning less than $87,000 a year from the hike in the Medicare levy, while those on higher wages would have their levy increased by more than the government’s plan.

Labor also wants to exempt workers earning less than $87,000 a year from the hike in the Medicare levy.

Mr Shorten has repeatedly attacked the government over its tax plans, likening it to giving cash hand-outs to multi-millionaires.

“It’s a different menu, another set of rules for those who can afford to upgrade to the pointy end of the tax system­,” he said last month. “Australians with lavish property portfolios, using complex deductions and ... stashing money in offshore tax havens, using every tax loophole that money can buy and leaving working and middle-class Australians to pick up the tab.”