Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
Labor will be asked to back the Turnbull government’s personal income tax package as a whole when parliament resumes on June 18.
However, it will be a case of who blinks first, with Labor insisting the legislation should be split, to allow low- and middle-income tax cuts from July 1 but hold off on other measures.
Treasurer Scott Morrison said the package as a whole was needed to ensure the economy steams ahead, following figures released on Wednesday showing the economy grew by 1.0 per cent in the March quarter, lifting the annual growth rate to 3.1 per cent.
“We are putting the whole package to the Senate,” Mr Morrison told reporters in Canberra.
The Parliamentary Budget Office provided Labor and the Greens with year-by-year costings of the income tax cuts, which the federal opposition had sought before considering the legislation.
Shadow treasurer Chris Bowen said the financial benefits of the third stage of the package overwhelmingly flowed towards men over women at a ratio of three-to-one.
As well, by the end of the medium-term (2028-29), stage two of the plan costs $13 billion a year as the stage three costs rise to over $10 billion.
Mr Bowen said the government should split the legislation to allow tax relief to flow from July 1.
“If the Turnbull government wants to do better for low- and middle-income earners it should support Bill Shorten’s bigger, better and fairer income tax cut plan,” he said.
Mr Morrison branded the costing breakdown of his plan a “joke”, as it was not possible to be precise in individual years over a decade.
His comments echoed those of Treasury boss John Fraser to a Senate committee hearing last week.
Government policies are calculated over four years in the budget and even in the out-years there are “sensitivity risks”, the treasurer added.
The government’s whole tax package will cost $144 billion over the next decade.
The cuts will come in three stages, with final component in 2024 increasing the 45 per cent marginal tax rate bracket from $180,001 to $200,001.
It will also remove the 37 per cent marginal tax rate altogether, so all income from $41,001 to $200,000 is taxed at a rate of 32.5 per cent.
The PBO has calculated the cost to the budget will be $6.25 billion in 2024/25, before rising by around $1 billion a year and totalling $41.6 billion over five years.
PBO ON PERSONAL TAX CUTS – YEAR-BY-YEAR:
2018/19 $360 million
2019/20 $4.12 billion
2020/21 $4.42 billion
2021/22 $4.5 billion
2022/23 $13.4 billion
2023/24 $11.15 billion
2024/25 $17.85 billion
2025/26 $19.55 billion
2026/27 $21.1 billion
2027/28 $22.9 billion
2028/29 $24.6 billion
Total: $143.95 billion
(Source: Parliamentary Budget Office)