Who’s on first? Turnbull, Morrison muff their income tax lines

 

Malcolm Turnbull had barely ­revealed his grand plan for tax ­reform yesterday before he was at odds with Scott Morrison over how it would work.

The Prime Minister and Treasurer were meant to be making the case for change but instead made contradictory claims over whether ordinary workers would end up paying more.

One week ago the difference between the pair was about the timing of the federal budget — a scheduling matter of whether it would be on May 10 or 3 and why Morrison was not in the “small circle” that made the change.

Yesterday the contradictory signals were over a matter of greater substance: whether the states would increase taxes on workers after gaining a share of income tax revenue.

Turnbull admitted the tax increase might happen over time but made it clear it would be up to each state.

“If we need more money … then the state would go to their parliament, raise the money, go to the people and persuade them of the merits of it,” Turnbull said on this central question.

For good measure, Turnbull said it again: “But in future, of course, on the longer term, a state should be free to lower that amount or indeed raise it and then they are accountable to their own voters.”

Morrison then denied the Prime Minister had said any such thing. “The Prime Minister, I don’t think, has gone that far ultimately,” he told Sky News Business when asked if states could raise their taxes.

The Treasurer does not want to be seen as supporting any tax increases. Fair enough. Yet there is no escaping the logic of the Prime Minister’s proposal.

A state power to increase income tax is an unavoidable part of a reform meant to give the states more control over their budgets. Labor Treasury spokesman Chris Bowen easily skewered both leaders over the contrasting ­remarks.

Given there was no formal paper yesterday to outline Turnbull’s proposal, it was even more important that the Prime Minister and Treasurer stayed on the same page. Yesterday it looked like they did not even have a script.