Australians could be enjoying tax cuts from July 1 if the Turnbull government splits its seven-year personal income tax plan.
As debate on the package – the cornerstone of this month’s federal budget – got under way in parliament, Labor made it clear it will support the initial cuts if the long term plans are separated.
But the government is adamant it won’t split the bill and accused the opposition of standing in the way of tax cuts.
The opposition supports the reduction of up to $530 a year under a new low and middle-income tax offset and the lifting of the 32.5 per cent tax bracket from $87,000 to $90,000, both starting on July 1.
“The government could pass this legislation today through this house … with our full support. But to do that the government should split this bill,” shadow treasurer Chris Bowen told MPs on Tuesday.
Labor wants more information on the tax cuts planned for 2022 and has “grave reservations” about the reduction in 2024.
Mr Bowen said the parliament is being asked to “write a cheque today” when no one knew if the funds would be in the bank in seven years time to pay for it.
He also wants to amend the bill so that tax relief for low and middle-income would be more generous in 2019, matching Labor’s proposal that would see this new tax offset almost doubled.
But Finance Minister Mathias Cormann has reaffirmed the government won’t split the package.
“We are focused on securing the passage of the whole plan,” he said.
“Labor will have to decide whether they will stand in the way of income tax relief.”
The latest Essential Research survey found almost half of respondents back Labor’s tax plan that would also raise the top tax rate to help reduce the budget deficit, while a third support the government’s package.
Asked who they trust most to manage a fair tax system, the coalition and Labor both scored 32 per cent, while 22 per cent saw no difference.
The government has the numbers in the lower house to pass the draft laws this sitting fortnight.
The real negotiations will come to a head when the Senate sits in late June – days out from the scheduled start of the first round of cuts.
The Greens won’t support any income tax cuts or Labor’s compromise and instead want the money invested in the nation’s public services.
Pauline Hanson and her One Nation Party do not support the personal income tax cut in 2024, saying Australians needs their tax cuts now.
Senator Hanson has also pulled out of an agreement to back the remainder of the government’s 10-year corporate tax cut plan, blaming a lack of action on the concessions it sought.