Australia to celebrate as PM’s tax cuts win cross bench support
Prime Minister Scott Morrison last night secured the numbers to pass his $158 billion tax cut plan through the parliament. HERE’S WHAT IT MEANS FOR YOU.
NSW
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It might be July 4 today but Australians will be celebrating a whole different kind of Independents Day after Prime Minister Scott Morrison last night secured the numbers to pass his $158 billion tax cut plan through the parliament.
Negotiations over the precise details of the agreement were still continuing late last night but Mr Morrison had confirmed he had the voting support of independent Senators Jacqui Lambie, Cory Bernardi and two Centre Alliance members Rex Patrick and Stirling Griff.
The breakthrough follows weeks of Labor grandstanding with Opposition Leader Anthony Albanese and his troops trying to pick apart the bill — and threatening to withhold support for stage three of the plan — which will reduce the tax rate from 32.5 cents to 30 cents for people earning between $45,000 and $200,000.
The government now expects to be able to pass the cuts without the support of the ALP. However, senior Labor figures last night still believed shadow cabinet would ultimately decide to wave through the bill in the senate because it is too politically damaging to stand against a tax cut on the final vote. The tax package will give immediate relief of $1080 to single income earners or up to $2160 for dual income families.
Stage two of the package will lift the 19 per cent tax rate’s top threshold to $45,000 in 2022-23.
Stage three, in 2023-25, will reduce the tax rate to 30 per cent for earners between $45,000 and $200,000.
This will mean 94 per cent of tax payers will face a marginal tax rate of no more than 30 cents in the dollar.
Tasmanian Senator Lambie came to the negotiating table late yesterday, saying she wanted the government to cough up $157 million to wipe Tasmanian state debt to the federal government.
She said she could not “in good conscience” support the tax cuts while the Tasmanian economy was battling to repay that social housing debt, which impacted homelessness in the state. The Centre Alliance senators had pushed the government to prioritise a reduction in energy prices.
There is a sense that Ms Lambie and Centre Alliance will work together to form a powerful crossbench bloc on future votes. Finance Minister Mathias Cormann said he was always happy to engage with the crossbench.
“We will be putting our plan for lower income taxes to the Senate tomorrow,’’ he said. “We call on Labor and all other non-Government Senators to act in the national interest by supporting our income tax reforms in full.
“Our income tax plan is economically necessary and fiscally responsible and it was endorsed by the Australian people at an election.”
Labor will still delay the process, moving amendments to the bill, calling for it to be split so that it cannot vote for stage three and for stage two to be delivered sooner.
But these amendments were last night set to fail, which will prompt a last minute shadow cabinet discussion on how to vote on the plan.
There was a group of Labor MPs who were deeply concerned about how the voters would react to a party which they see has having obstructed tax savings.
BARRIER TO HIP POCKET RELIEF WILL NOW FALL
COMMENT: Scott Morrison has snared his first big win of the new parliament, and the Australian people have gotten theirs.
Believing he’d secured the numbers to pass his $158 billion tax cuts package, the PM will today show his government can pull off the negotiation gymnastics in the Senate when it needs to.
And in the process, Labor’s tactics have backfired.
Anthony Albanese tried to couch his opposition to stage three of the tax cuts in what Labor thought just might be a politically palatable pitch of bringing stage two to the people earlier.
But to the average voter, that message got lost in the grandstanding of the Opposition trying to insert itself into a plan the Australian people had already voted for.
It even meant Labor divided itself, with MPs including NSW frontbencher Joel Fitzgibbon gutsy enough to speak out on behalf of
their electorates.
It’s still likely that today, when the votes are tallied, Labor will stand on the same side as the government because shadow cabinet knows full well how voters
will feel about it voting against a tax cut.
Labor knows the government won’t let the party forget it.
This week’s interest rate
cut confirmed the urgency required to stimulate the economy. Both sides of politics tried to say the Reserve Bank’s statement confirmed their own plan — but what it really confirmed was that they shouldn’t waste time arguing.
Labor was on solid ground to criticise the government for not passing stage one before July 1, but it went too far by grandstanding over the nature of the package.
Finally, today the tax cut package the people voted for on May 18 will be confirmed.
— Anna Caldwell
LABOR MP ED HUSIC MUDDLES FACTS AND FIGURES
Western Sydney MP Ed Husic has appeared to confuse the effect of Labor’s position on tax cuts in his electorate and also seemed to downplay the impact of his voters saving $15,000 over 10 years.
In an interview on Sky News, Mr Husic, who represents voters in parts of Western Sydney including Mount Druitt, Blacktown and Rooty Hill, seemed to imply that only people earning over $180,000 would benefit from stage three of the government’s tax plan, which Labor has railed against.
But treasury data shows Mr Husic’s electorate has 71,939 taxable voters and 46,491 of them would benefit from stage three, including people earning as little as $45,000. Mr Husic also bizarrely called the budget surplus a “vanity exercise”, forcing ALP deputy leader Richard Marles to clarify the party was committed to fiscal responsibility.
Mr Husic’s comments came after The Daily Telegraph revealed that a worker on the average taxable income — $63,843 — in his electorate of Chifley would save $15,000 over a decade under the government’s tax cut plan. Mr Husic said he was “scratching his head” at the report that said the voters would be denied a tax cut of $15,000 if Labor blocked the bill.
“I was scratching my head and I looked at the article and it’s over 10 years!” he told Sky News.
“The number of people in the Chifley electorate that earn over $180,000 comes up to the grand total of 0.5 per cent.”
However, his average income earners will also benefit from stage three which reduces the tax rate from 32.5c to 30c for people earning between $45,000 and $200,000.
— Anna Caldwell
ALP POLLIES SHOULD HEED THE LESSONS OF JFK
COMMENT: “ASK not what your country can do for you,’’ John F. Kennedy famously said at his inaugural address.
“Ask what you can do for your country.”
As an inspiring piece of oratory and a call to service, the late president’s words are hard to beat. But Kennedy also knew that it was a two-way street.
It’s worth noting as Americans gear up to celebrate their Independence Day, and our own parliament prepares to pass tax cuts, that even a Democrat like JFK knew that punishing earners was no way to grow an economy.
When Kennedy was elected, top federal income tax rates in the US were punishing — as high as 91 per cent — and corporate taxes sat at 52 per cent, creating a massive drag on the economy.
Kennedy proposed what would become the Revenue Act of 1964, and although he did not live to see its passage, it cut the top income tax rate to 70 per cent and corporate taxes to 48 per cent. The result? Incomes and investment increased, while unemployment fell to 3.8 per cent in 1966.
What’s more, tax revenue went up in the years after its passage — not down, as doomsayers predicted.
A history lesson, for sure.
— James Morrow
Originally published as Australia to celebrate as PM’s tax cuts win cross bench support
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