Tax cuts tipped to pass but Jacqui‘s support has strings
THE Morrison Government sees a "pathway" to securing its $158 billion tax cuts today - and cash back for Australians of up to $1080 from next week. But at what cost is it willing to pay to secure them.
More than two million Queenslanders will be able to get up to $1080 back on tax after Finance Minister Mathias Cormann is understood last night to have obtained in-principle support from Centre Alliance, Jacqui Lambie and Cory Bernardi for the cuts.
But it is also likely Labor will support the Bill today, which secures long-term tax reforms to bust bracket creep.
The win for workers is also a win for the Morrison Government, which looks set to fulfil its main election pledge in the first sitting of parliament.
It will also be welcome news for the Reserve Bank, which, in the absence of wage growth, has called for stimulus for the economy.
Low to middle-income earners will share in $15 billion in tax cuts out to 2021-22, with up to a $1080 windfall once they file their tax returns in the coming weeks.
Workers will be urged to spend their tax cuts - on top of the extra money saved from two consecutive interest rate cuts - to help boost the suffering retail sector.
More money flowing through the economy will be coupled with an expected increase in house prices, which have plummeted in some capital cities.
No specific deal has been done to secure votes with the crossbench however, Centre Alliance and Senator Lambie have asked for more to be done to combat energy prices.
Yesterday, Senator Lambie said she wanted the Government to help pay down Tasmania's debt.
She said she could not "in good conscience" support tax cuts while the Tasmanian State Government owed $157 million to the Commonwealth in social housing debt.
Stage two of the tax plan kicks in from 2022-2023 and increases the low income tax offset and threshold from $41,000 to $45,000, allowing workers to keep $48 billion of their earnings out to 2029-30.
Under the third stage of the bill, which Labor has argued against but is likely to waive through, from 2024-25, the marginal tax rate will reduce from 32.5 per cent to 30 per cent, saving workers $95 billion.
Opposition treasury spokesman Jim Chalmers said they wanted to bring forward stage two, which increases they middle-income tax threshold, and delay the third stage.
"What those amendments are about is getting more workers a tax cut sooner, boosting the economy which desperately needs it," he said.
"(It's) not saddling the Budget with $95 billion in unfunded tax cuts when the Government doesn't know what the Budget or the economy will look like."
The Government opposes bringing forward stage two from 2022, which Labor estimates would cost $3.7 billion.
Senator Cormann said Labor and the crossbench should "act in the national interest" to pass the reforms in full.
"Our income tax plan is economically necessary and fiscally responsible and it was endorsed by the Australian people at an election," he said.
Prime Minister Scott Morrison said the Australian people voted for the plan and "we are keeping faith with what the majority of the Australian people voted for".