Bill Shorten says Labor will support tax relief for low and middle income workers but ‘no responsible’ opposition would vote for the whole package

This article is more than 2 years old

This article is more than 2 years old

Labor has thrown down the political gauntlet on the Turnbull government’s income tax cuts, confirming it will only support stage one – the tax relief for low and middle income earners – as the package sits on a knife’s edge.

As foreshadowed by the shadow treasurer Chris Bowen on Monday, Labor has resolved to oppose stage two and three of the income tax cuts package outlined by the Turnbull government on May 7 – setting up a clash on the competing economic plans both at the July byelections and at the federal election this year or next.

Confirming Labor’s position on Tuesday, Labor leader Bill Shorten dared the government to bring on a political confrontation about its insistence that tax relief for high income earners in 2024 needed to be legislated right now: “just put it to the people”.

Shorten told reporters Labor was prepared to support tax relief for low and middle income workers today but the 10-year package was “an irresponsible plan from an irresponsible government and no responsible opposition would vote for it”



“We say to the government that if you want to talk about promises in more than two election cycle’s time – take these radical proposals to the people of Australia and see what they think about them.”

Shorten said in the event the entire package passed the Senate after the looming parliamentary fortnight of backroom brinkmanship, Labor would repeal the tax cuts in stage two and three if it won the next federal election – a stance reminiscent of Labor’s GST “Rollback” campaign in the early 2000s.

Stage one of the government’s $143bn package, a low and middle-income tax offset, will give $530 to 4.4 million taxpayers with incomes between $48,000 and $90,000 in 2018-19. This stage also raises from $87,000 to $90,000 the income threshold under which the tax rate of 37% applies.

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Stage two, which begins in 2022, lifts the top threshold for the 19% rate from $37,000 to $41,000 and lifts the top threshold for the 32.5% tax rate from $90,000 to $120,000.

Stage three abolishes the 37-cent tax bracket from mid-2024.

As of Tuesday morning, the Turnbull government does not have the numbers in the Senate to pass the entire income tax package, with the unpredictable One Nation bloc pivotal to the eventual outcome.

On Monday, in talks with other crossbenchers, Pauline Hanson signalled she was supportive of stage one, had an open mind on stage two, and was opposed to stage three.

Despite lacking the requisite Senate support for all three stages of the plan, the government has gone into the last sitting fortnight before the winter recess insisting the $143bn income tax package be considered as a whole.

The outcome of the coming debate is unpredictable, but some in the Senate predict the likeliest outcome is stage three of the plan will be knocked out of the legislation, forcing the government to decide if it will sink the whole package if one element doesn’t pass.

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Once chamber debate is underway, Labor will combine with the Greens and the South Australian independent Tim Storer to attempt to remove stage two and three from the tax package.

The Greens confirmed on Tuesday it would cooperate with that effort even though it remains opposed to the entire package, and will vote against it at the third reading.

The Centre Alliance bloc has now resolved to support stages one and two of the government’s tax plan, so it won’t vote for splitting the package if that action has the effect of stymying stage two.

Stirling Griff of the Centre Alliance told Guardian Australia he and colleague Rex Patrick were yet to resolve their stance on stage three, which involves flattening the tax scales so workers earning between $40,000 and $200,000 pay the same rate.