Federal budget 2018: Labor will support July 1 tax relief start

Labor will back the first stage of personal income tax cuts for low and middle income earners.

Opposition treasury spokesman Chris Bowen.

Bill Shorten will back the first stage of Scott Morrison’s personal income tax cuts for low and middle income earners, set to be debated in the House of Representatives tomorrow to apply from July 1.

But Labor has not indicated what it will do with the rest of the income tax cut package, which it has slammed as being “off in the never never” in a scathing assessment which treasury spokesman Chris Bowen said had “failed to fix five years of unfairness”.

The government hopes to pass the package in its entirety before the end of June. The tax cuts will pass on immediate relief to low and middle-income earners through a new tax offset, kicking in from July, worth up to $530 for as many as 4.4 million people on taxable incomes between $48,000 and $90,000 a year.

The tax relief will phase out for those earning above $90,000 and extinguish for those earning more than $125,000.

The threshold for those paying the 32.5 per cent tax rate would be increased from $87,000 to $90,000 from July 1 to stop a further 210,000 Australians from moving up into the higher 37 per cent rate.

The changes are the first part of a seven-year plan that aims to bring bracket creep to an end and deliver a flat tax rate of 32.5 per cent for middle Australians (who earn an income of between $41,000 and $200,000) by 2024-25.

Mr Bowen and finance spokesman Jim Chalmers slammed the 2018 budget as an “unfair budget that puts big business before battlers”, claiming cuts to the energy supplement for pensioners, TAFE, universities, schools and hospitals were being used to fund business tax cuts.

Mr Bowen said the budget also failed the fiscal test.

“Even with $40 billion in additional tax revenue, net debt for this coming year is double what it was when the Liberals came to office and gross debt, which crashed through half a trillion dollars on their watch for the first time in history, will remain well above half a trillion dollars every year for the next decade,” Mr Bowen said.

“Clearly the government has committed billions of dollars on the back of a temporary global economic upswing. We have seen how that plays out before.

“Labor will back the personal income tax measures that begin on July 1 this year, and we’ll have more to say about how else we’ll help working people.’’

However, Mr Bowen attacked planned income tax cuts for higher income earners in years to come.

“Most of this package is off in the never never — it’s a hoax for Mr Turnbull to tell people they have to vote for him at least two more times before they get tax relief in 2024,” he said.

Greens leader Richard Di Natale said the budget offered a stack choice between “the Liberals’ selfish, dog-eat-dog world view” and a “much more caring society where we look after each other”.

“This government has spent five years looking after the needs of big corporations, and now they’re looking after the executives who run them,” Senator Di Natale said. “A few extra bucks in your pocket at tax time is not enough to offset decades of privatisation and the harsh cuts to services this government has made.”