There are increasing signs of a political stand-off over personal income tax cuts when the new federal parliament sits for the first time next month.
The government has repeatedly knocked back the idea of splitting the tax cuts bill that would see changes out to 2022 and 2024, saying it was the plan it took to the recent federal election which it now has a mandate to implement in full.
The total tax plan amounts to $158 billion, a figure the Labor opposition and some crossbenchers have baulked at given the uncertain economic outlook.
Shadow treasurer Jim Chalmers says splitting the tax bill, so low and middle income earners can get immediate relief, would likely be supported unanimously in parliament.
He noted the Reserve Bank has called for tax cuts in the near term to boost consumption.
“The biggest problem in our economy is not actually international conditions at the moment, as (Treasurer) Josh Frydenberg has been pretending,” Dr Chalmers told reporters in Brisbane on Saturday.
“The biggest challenge that we have in the economy is actually consumption and that’s because we’ve had such a long period of weak income growth.”
This week’s monthly business survey by National Australia Bank showed the retail sector is now in recession.
Dr Chalmers says claims the government has a mandate to implement its full tax plan are “laughable” given the third stage of the plan does not happen until 2024 until after the next election.
“It remains to be seen whether the government will in the end split the bill,” he said.
“I think that they are playing games with tax cuts and with people’s disposable income and indeed with the economy itself.”