Labor has pointed to a new economic report as evidence the Turnbull government’s tax cut plan is poorly timed ‘madness’.
Deloitte’s Business Outlook, released on Monday, describes personal income tax cuts outlined in the May budget as repeating an old mistake by ‘spending a temporary revenue boom on permanent promises’.
‘We’d prefer to see the budget in better health before any such promises were made,’ the respected consultancy firm said.
The report warns China’s slowdown will ‘slowly seep into commodity prices, winding back profit-driven boosts to federal revenues, while a mini-credit crunch will sound the death knell for the east coast stamp duty bonanza’.
Shadow treasurer Chris Bowen said it showed why the coalition was not campaigning hard on the $140 billion worth of tax cuts.
‘Locking in long-term tax cuts when there’s already half a trillion in gross debt and no one knows what the global or domestic economic backdrop will be in four or six years time is sheer madness,’ Mr Bowen said.
‘Deloitte’s analysis of the Turnbull government’s never never tax cut plan is a devastating critique.’
He said by 2025, the combined fiscal impact of big business tax cuts and stage three of the income tax cuts is about $25 billion a year.
‘The Liberal Party’s unfunded tax cut plans mean more pressure on debt and a stronger likelihood of further cuts to schools and hospitals over the next decade.’
The report found government budgets were looking the ‘healthiest in a decade’ due to a surge in federal profits taxes and state stamp duties.