Split tax cut bill, crossbench blocs tell PM

Senate crossbenchers call on the PM to split his seven-year tax package so they can support $530 payments to most earners.

‘I will not support a tax threshold of under $50m,’ says senator Pauline Hanson. Picture: Kym Smith

The two key Senate crossbench voting blocs — One Nation and Centre Alliance — have called on Malcolm Turnbull to split the bills for his seven-year tax package so they can support the passage of $530 lump-sum payments for low to middle-income earners from next year.

The two balance-of-power parties — which together control five upper house seats — have also savaged Labor’s position on company tax, arguing that any push by Bill Shorten to revoke tax cuts for businesses with a turnover above $10 million would lead to job losses and hurt small-time “mum and dad” entrepreneurs.

Labor is considering unpicking the already legislated tax cuts for companies with a turnover of up to $50m and introducing a new ceiling of $10m, but has made no final decision.

Treasury data obtained by The Australian shows there are about 14,000 businesses with a turnover between $10m and $50m, employing 1.13 million workers, some of whom would be at risk from a decision to unwind the already legislated tax cuts.

One Nation leader Pauline Hanson, who controls three upper house seats, told The Australian yesterday she would never support the move to revert to a $10m threshold.

“I will not support a tax threshold of under $50m,” she said. “I am ruling out One Nation support.”

She added: “These are ordinary mum and dad businesses. This could be your takeaway shop or a cafe or a restaurant. These people are doing it tough.”

Senator Hanson has also been critical of the government’s personal income tax cuts, which are divided into three stages.

Phase one of the package, containing tax relief for low to middle-income earners in 2018-19, has been linked in legislation to a flattening of the tax rate in 2024-25 at 32.5 per cent for those earning between $41,000 and $200,000. While Scott Morrison yesterday defended the decision to ram through all three phases in the same bill, saying it was part of a “holistic plan” to “deal with bracket creep”, Senator Hanson was unconvinced.

“They’ll have to split it,” she said. “We could have a recession. And to make these tax cuts in eight to 10 years’ time is too far ahead.

“I can’t support it.”

Centre Alliance, which controls two upper house seats, backed the One Nation objection. Senator Stirling Griff told The Australian the government “does need to split the bill”, although he was just as scathing of Labor’s position on the corporate tax rate.

He warned that any move to unpick already legislated tax cuts in favour of a $10m ceiling would send people back to the dole queue. “I think it’s very dangerous,” Senator Griff said. “It would be a hit to jobs, that’s what it would be ... You’re going to take money away from a very substantial number of small businesses.”

While Senator Hanson finalised a deal with the government to support its plan to reduce the corporate rate to 25 per cent for all businesses by 2026-27, Centre Alliance has refused to back the move despite doing a separate deal in March 2017 to pass on tax relief for businesses with a turnover of up to $50m.

Opposition Treasury spokesman Chris Bowen yesterday indicated on Sky News that Labor would finalise its position on company tax by July 1, which is when businesses with a turnover of up to $50m are due to begin receiving the legislated tax cuts.