Fight looms in Parliament over income tax cuts

Scott Morrison introduced the tax plan into Parliament during the previous sitting week.

Scott Morrison introduced the tax plan into Parliament during the previous sitting week. Photo: AAP

The Turnbull government’s personal income tax plan will face scrutiny when Parliament returns on Monday, as the Coalition scrambles to pass the entire bill by the new financial year.

The government has set itself a July 1 deadline to legislate the $140 billion plan, which would hand tax refunds of up to $530 to millions of Australians next year, before radically flattening tax rates to benefit those on higher incomes.

The legislation will be debated in the lower house on Tuesday ahead of a fight in the Senate, where Labor and some crossbenchers will demand the government split the bill.

Before it faces a vote in the upper house, the government and bureaucrats will be grilled over the three-stage package at Senate Estimates hearings over the next fortnight.

Treasurer Scott Morrison is vowing not to split the bill and has also refused to provide a year-by-year breakdown of the cost of the seven-year package. He has said the 10-year price tag is $140 billion.

Labor, which is yet to confirm it will block the latter stages of the package, will pursue these figures at the hearings.

Tax fight feeds byelection battle

The battle over the major parties’ competing income tax cuts will feature prominently in five upcoming byelections in Western Australia, Tasmania, South Australia and Queensland.

Both Malcolm Turnbull and Bill Shorten have already began campaigning in the marginal Labor seats of Longman, north of Brisbane, and Braddon, located in north-west Tasmania.

While the government has exploited Bill Shorten’s loss of four MPs earlier this month over citizenship issues, Labor has been keen to sell its more generous tax package to voters.

More than four million taxpayers earning between $48,000 and $90,000 would receive the full $530 tax cut under the government’s plan. Those workers would get $928 under Labor.

The government is quietly confident about its chances of winning Longman given that the traditionally LNP seat went to Susan Lamb via the preferences of One Nation, which is backing the Coalition this time.

Both contests give a good indication of how the competing tax plans have been received by the public, Australian Bureau of Statistics data suggests.

In Longman, more than 22,000 Australians, or about 20 per cent of all income earners in the electorate, make between $52,000 and $91,000. That compares to a national figure of 29 per cent.

In Braddon, where former Liberal MP Brett Whiteley will try to defeat incumbent Justine Keay, more than 12,000 residents, or 18 per cent, were on incomes of between $52,000 and $91,000.

The government is also promising tax relief for high-income earners by scrapping the 37 per cent tax bracket in 2024, meaning those on between $41,000 and $200,000 would pay a top marginal tax rate of 32.5 per cent.

Labor has been highly critical of the move, which delivers significant benefits for those on more than $120,000.

The pitch to higher-income earners may be less resonant in Braddon and Longman, where incomes in both electorates are below the state and national median.

Only 4 per cent of those in Braddon and 5 per cent of Longman residents earn above $104,000, census data shows. That compares to a national figure of 11 per cent.

In Mayo, where the Centre Alliance’s Rebekha Sharkie will face Liberal candidate Georgina Downer — the daughter of former High Commissioner to the United Kingdom Alexander Downer — 7 per cent are on incomes above $104,000.

Speaker Tony Smith is expected to announce a date for the five contests in the coming days.

Meanwhile, the opposition’s promise to double the government’s income tax cuts was dealt a blow on Sunday with the Greens saying they would oppose the move if Labor was elected in order to protect public services.

But opposition frontbencher Anthony Albanese said he was still confident Labor could get those tax cuts through Parliament.

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