Tax cuts Scott Morrison’s ‘mission’ for middle income earners

The Treasurer is committed to cuts for middle income earners in the budget, despite no mention of them in the economic update.

Federal Treasurer Scott Morrison. Picture: AAP

Scott Morrison says he’s on a personal “mission” to find the money to fund personal tax cuts for middle income earners in next year’s budget, despite no mention of the cuts in yesterday’s Midyear Economic and Fiscal Outlook.

Hitting the Sydney Markets early this morning to spruik MYEFO, the Treasurer said tax cuts and achieving yesterday’s forecast of a $10.2bn budget surplus by mid-2021 were both priorities.

“It is our intention to ensure that we provide tax relief for middle income Australians and we stay on track for our budget surplus,” Mr Morrison said.

“Those two things both have to be achieved.”

Yesterday’s outlook included a forecast a budget deficit of $23.6bn for this financial year, compared to the previous May budget estimate of $29.4bn.

“Giving tax relief to middle income Australians is the mission the prime minister’s given me,” Mr Morrison told the Nine Network.

“So there’s a bit of work to do on that between now and the budget after that, but that is what we want to see.

“We understand that middle income Australians are feeling the pressures.”

Mr Morrison acknowledged that wages growth was sluggish, despite significant growth in employment, but said he was hopeful wages would improve.

“As you get more and more people getting jobs, that is going to put pressure on the labour market,” he said.

“We are seeing company profits starting to lift after many years of where they were going backwards, so small businesses who were dipping into their own pocket to keep their employees in jobs are now actually getting a bit of joy themselves and we want to see that increase.

“If that can continue, I would expect to see wages improve in the future.”

Debt is ‘actually continuing to grow’: Bowen

Labor treasury spokesman Chris Bowen said it was good that government debt was “increasing at a slower rate than previously predicted.”

“The government is spinning that the debt is coming down. It’s not. It’s actually continuing to grow, of course,” he told ABC radio.

Mr Bowen said he attributed slow wages growth to a number of factors, and would not hold the government responsible for all of them, but would blame them for cuts to weekend penalty rates.

“I mean it’s hard to grow wages when wages are being cut. It’s pretty straightforward,” he said.

“The government says that increasing wages is one of the priorities, well they’re standing by and watching wages and people who work on the weekend be cut, now that is the opposite of the sort of approach we need in Australia at the moment.

“I do think that there’s a case to be made for ensuring that particularly where governments can have an influence we’re not seeing wages go backwards.”

Government is ‘increasing tax for seven million Australians’

Mr Bowen said the government was talking about personal income tax hikes, but in fact giving low and middle income earners a tax hike through the Medicare levy increase.

“Page One of the MYEFO yesterday, Page One of the document confirms they’re increasing tax on seven million Australians,” he said.

“That’s everybody who earns between $21,000 and $87,000 a year.

“I think it’s a particularly politically cynical exercise to cut income tax after you’ve increased it. It’s like Arthur Daly’s car yard. You put the prices up one day and take them down the next day and say it’s a sale.”

Asked whether Labor supported the tax cuts, Mr Bowen said he was not going to respond to “thought bubbles”.

“We haven’t seen any income tax cuts, so I’m not going to respond to something that doesn’t exist,” he said.

“I’m not going to respond to this thought bubble, which is, ‘hey, one day we might want to cut personal income tax’.

“That’s the degree of the analysis and the rigour which has gone into what Malcolm Turnbull and Scott Morrison have said so far. There is not one jot, not one word of personal income tax cuts in yesterday’s official government fiscal update.”

‘You can have budget repair or business tax cuts, not both’

Mr Bowen said there was not room in the budget for the government’s $65bn corporate tax cut plan, despite international pressure from numerous countries with lower tax rates, including the US, where Donald Trump is poised to lower business tax from 35 per cent to 20 per cent.

“We cannot afford $65bn over the next decade,” Mr Bowen said.

“I mean you can believe in budget repair or you can believe in company tax cuts. You can’t believe in both, and the budget’s about priorities.”

Mr Bowen said companies did not make investment decisions based on countries’ company tax rates alone.

“We’ve had higher tax rates than many other countries for a long time,” he said.

“I mean we are never going to have similar tax rates to some of the countries in Asia for example, but we also have other benefits which attract investment and attracts important economic activity for Australia.

“You’ve got to compare apples with apples. In Australia we have dividend imputation. No domestic investor pays corporate tax in Australia, in effect, it gets refunded.

“That doesn’t exist in the United States, doesn’t exist in Europe, so let’s make sure we’re comparing rates.”

“Of course we need to have a view to our competitiveness, but competitiveness is not just about headline tax rates.”

— With AAP