Hanson tempts Turnbull with a flat-tax proposal

Pauline Hanson wants the proposed flat tax rate of 32.5 per cent lifted to 34.5 per cent in a bid to limit the loss of revenue.

One Nation senator Pauline Hanson. Picture: AAP

Pauline Hanson says she would be more inclined to support Malcolm Turnbull’s personal income tax cuts if the flat tax rate of 32.5 per cent — scheduled to take effect in 2024 — were lifted to 34.5 per cent in a bid to limit the loss of revenue to government.

The One Nation leader, who yesterday shocked the government by withdrawing her support for its big-business tax cuts, ­appeared to soften her blanket opposition to phase three of the personal income tax cuts.

Senator Hanson — who has called on the government to split its bill — has also suggested the government modify the final phase of its tax plan in a bid to win passage through the upper house.

“We’re talking about this coming in 2024-25,” Senator Hanson said. “At this stage, I need to sit down and I get some figures.

“What would be far better is if they can — and I’m only considering this — combine phases two and three together.

“Instead of reducing it (the tax rate) down to 32.5 per cent, reduce it to probably 34.5 per cent … so all Australians can benefit from it.”

The government has used legislation to link phase one of its income tax package, which provides a payment of up to $530 for low to middle-income earners on incomes up to $90,000 next year, to a flattening of the tax rate in several years.

The proposed flattening of the tax rate at 32.5 per cent for those on incomes of between $41,000 and $200,000 would take effect in 2024-25 and constitutes phase three of the package.

Phase two would bridge these two proposals. It would lift the ceiling on the 32.5 per cent tax bracket from $90,000 to $120,000 in 2022, before the planned abolition of the 37 per cent tax rate two years later in 2024.

Opposition Treasury spokesman Chris Bowen has demanded the government split its bill so Labor can support tax relief for low to middle-income earners.

The Labor caucus yesterday agreed to alter the government’s tax package by moving amendments in both houses. The aim is to allow phase one of the tax package to proceed as planned, but to cut the government’s bill of phases two and three.

The first Labor amendment would allow tax cuts due in the 2019-20 financial year to commence on schedule, while the second Labor amendment would expand the size of this initial tax relief. The ALP has proposed to increase the tax offset to $928.