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Personal tax cut up for debate

Income tax cuts have headed to the Senate — the final hurdle before you might feel some tax relief. Picture: Thinkstock
Income tax cuts have headed to the Senate — the final hurdle before you might feel some tax relief. Picture: Thinkstock

TREASURER Scott Morrison insists he will not be splitting plans for personal income tax cuts to ease their passage through the Senate.

Plans for both personal income and business tax cuts will be put to the test during the next two weeks of parliamentary sittings.

Mr Morrison says his upper house colleagues have been working diligently with the "unpredictable and confusing" Senate crossbench to garner support for the tax package.

"We are putting the whole plan forward because we believe all Australians who work hard deserve tax relief," he told the Seven Network on Monday.

"We are for lower and more competitive taxes."

Finance Minister Mathias Cormann insists he will not be giving in to Labor's demands to split the seven-year, multi-phased personal income tax plan, which will be debated in the upper house for the first time on Monday.

"We have prioritised low and middle-income earners, but we have ensured that we address bracket creep across the board," Senator Cormann says.

But Opposition Leader Bill Shorten has described the plan as it stands as "pretty dodgy", although he's willing to work with Prime Minister Malcolm Turnbull to vote for the cuts due this year.

Labor backs the new low and middle-income tax offset worth up to $530 for individuals that will start from July 1, as will an increase in the upper threshold for the 32.5 per cent marginal tax rate from $87,000 to $90,000.

But it says getting rid of the tax bracket two elections away is a step too far.

"If you want to give promises of tax cuts in more than two elections' time, fight the next two elections and see where we are going then," Mr Shorten says.

Next week the Senate is scheduled to recommence debate on the remainder of the government's 10-year business tax plan which will reduce the corporate tax rate from 30 per cent to 25 per cent.

Opposition leader Bill Shorten says the plan is ‘pretty dodgy as it stands’. AAP/Richard Wainwright
Opposition leader Bill Shorten says the plan is ‘pretty dodgy as it stands’. AAP/Richard Wainwright

The government fell short of two senators just before Easter to get the plan passed and since then Pauline Hanson has reneged on an agreement with Senator Cormann to support it.

Meanwhile, Mr Morrison has launched a fresh attack against Labor's proposed changes to share dividends, claiming the proposal will save much less than promised.

He argues the treasury numbers point to a $10 billion "black hole" in the opposition's plan to cut cash handouts for non-taxpaying shareholders. "Treasury's costing of Labor's retiree tax proposal confirms concerns raised at the time Labor announced their proposal that they had over-estimated the revenue they expected to collect," the treasurer told News Corp.

Senator Cormann was staying tight-lipped about how his negotiations over the Turnbull government's tax package are going with the Senate crossbench.

"I don't provide running commentary on my conversations with Senate colleagues," he told reporters on Sunday.

The Australian Institute believes over the long term the government is over- compensating for bracket creep at all income levels.

"Our analysis shows the two highest income tax brackets have received the largest amounts of overcompensation in the name of bracket creep, when in fact they actually require the least," the institute's senior economist Matt Gradnoff says.

Next week the Senate is scheduled to recommence debate on the remainder of the government's 10-year business tax plan which will reduce the corporate tax rate from 30 per cent to 25 per cent.

Topics:  economy editors picks finance money tax tax cuts


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