Labor leader Bill Shorten has launched a blistering attack on the Turnbull government’s “income tax cuts for millionaires”, in a clear signal his party will take the issue to the coming election.
The $144 billion income tax cut package passed into law on Thursday after the government secured the backing of cross-bench senators, including from Pauline Hanson’s One Nation party.
The measures will grant most Australian taxpayers an annual rebate of $540 a year. The highest income earners, meanwhile, will get a tax cut of $7225.
See the full details of the three-stage tax cut plan here.
Speaking to media at the University of the Sunshine Coast on Friday, Mr Shorten said the tax cuts were irresponsible and “a complete joke”.
“Labor values the aspiration to be able to see kids going to university. The Government values the aspiration to give tax cuts to surgeons and to barristers and to bankers. It’s all about priorities,” Mr Shorten said.
“The element which Mr Turnbull hasn’t given a guarantee on is he cannot predict, and no responsible government can predict, with any certainty the economic circumstances that Australia will be in in 7 years time.
“These tax cuts in seven years time are a massive political joke. And I think it’s long overdue for Mr Turnbull to front up and say, does he guarantee that he can predict what the Australian economy will look like in seven years?
“Because if he can’t guarantee that, how on earth can he guarantee these tax cuts and tax scales?” he said.
Labor revealed earlier this week that it would repeal the second two stages of the legislation, which flatten the income tax system and grant tens of billions of dollars worth of tax cuts to high-income earners.
As a result of these measures, by 2025 someone earning $200,000 a year or more will receive a tax cut of $7225 – a tax break 13 times greater than that received by the average Australian taxpayer.
In an interview with ABC Radio National’s Hamish McDonald on Friday, Treasurer Scott Morrison deflected questions about the perceived unfairness of this dicrepancy, refusing to acknowledge the $7225 figure was correct.
Instead of talking about the dollar amounts, Mr Morrison focused on the proportional tax cuts, claiming people on lower income would see a greater tax cut as a proportion of tax paid.
“I think people on lower incomes will get a greater proportional tax cut over those seven years than those on higher incomes.
“As you move up through the tax scales, as you earn more, you pay more tax. I mean, today, someone on the highest tax rate pays $84,600 on median every year and those earning up to $37,000 pay $1,900.
“Those between $37,000 and $87,000 pay about $10,500, those who are on higher incomes will still pay an average tax rate almost three times those on lower levels of income and so the progressivity of our tax system is not under threat,” Mr Morrison said.
If a future Labor government were to repeal the tax cuts, it would face fierce opposition from the Coalition, who would paint the repeal as an income tax hike.
However, given the tax cuts would not come in in full until 2024-25, the likelihood is a Labor government could repeal them before they took effect – meaning higher-income Australians would not actually feel any difference.