Malcolm Turnbull has backed the treasurer and warned that Labor will roll back changes if elected

This article is more than 2 years old

This article is more than 2 years old

Scott Morrison has defended the government’s business and personal income tax cuts – described as “the biggest change to personal tax since the GST” – and vowed to fight Labor on tax policy at the next election.

Speaking at the South Australian Liberal party’s annual general meeting, the treasurer doubled down on his tax package, saying the government’s poor performance in the Super Saturday byelections was due to Bill Shorten’s “lies” rather than a lack of support for the policy.

In May, the government unveiled a radical change to Australia’s progressive tax system that would remove a tax bracket by 2024, and require workers earning between $40,000 and $200,000 to pay the same rate.

“Bill Shorten is full of hot air and lies,” he told the party faithful on Saturday. “You cannot take his promises to the bank. [He told] falsehoods in the recent byelection, straight up blatant lies.

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“We believe it is your money and we believe you should keep more of what you earn. 94% of Australians will not face a higher rate of tax simply because they are doing better.”

Speaking on the same day, Malcolm Turnbull added his support.

“How long have we been talking about the disincentive of higher tax rates?” he asked in Western Australia. “This is a phenomenal reform, long overdue … Labor voted against it and they will reverse it if they get back into government.”

In the wake of July’s byelections, Tony Abbott had pressured the government to drop its planned corporate tax cuts for big business, saying there were “no votes” in the policy.

The policy would slash the tax rate for companies earning more than $50m, from 30% to 25%. Last year, the government also legislated for tax cuts for business earning between $10m and $50m.

On Saturday, Morrison defended the tax cuts to both small and large business, and said the flattening of income tax would end the annoyance of bracket creep.

He has already confirmed he would stick to the tax cuts for big business, despite Abbott’s comments.

“How many times have you heard talk that make people talk about bracket creep?” he asked. “Why is bracket creep so annoying? It is annoying because it goes against the principle that I am putting more in, I am trying harder, taking an extra shift … and because of that, I have got to pay a higher rate of tax.

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“Every business at the moment under $50m has a legislated tax cut to 25% … of course we want to see that extend across the whole economy. Bill Shorten will put those small businesses taxes up from 25% to 27.5%

“Bill, how does a business sending more money to the government mean there’s a chance or likelihood of someone getting a wage rise? I mean, that is numpty economics. It doesn’t make any sense.”

Modelling from the Australia Institute found that the flattening of income tax would benefit high-income earners more than the rest of the population.

The country’s top 10% of income earners would get 40% of the value of the tax cuts, while the bottom 30% of earners would get 7%, it found.

Prior to the byelections, Shorten told reporters in Longman that the tax cuts were “a cheque on the national credit card [that would] principally go to the ... most well-off 20%”.

The government has also introduced a tax cut for low to middle-income earners, which Labor supports.