Labor’s tax pledge overshoot

A $10-BILLION black hole has emerged in Bill Shorten’s election sums after official Treasury analysis revealed his contentious “retiree tax” would bring in drastically less over a decade than first thought.

The first detailed modelling of Labor’s proposal to scrap share tax refunds, which was expected to deliver a near $60 billion campaign war chest, includes a $1 billion shortfall over the current budget period.

Treasurer Scott Morrison will today use the revelation to sharpen his attack on Labor’s economic credentials, as the Turnbull Government tries to convince the Senate crossbench to pass the full suite of company and personal income tax cuts.

The Government today will release Treasury’s policy costings, which are based on likely behavioural changes among people who would rearrange their affairs to avoid the new tax.

Mr Morrison said last night the black hole was “another chapter in Labor’s sorry history of overstating revenue measures”.

“[It] not only underscores why Labor cannot be trusted to manage the nation’s finances, but it also undermines any claim they make that even their higher taxes pay for their spending promises,” he said.

“Labor are always promising to spend more money. But you cannot believe their promises because they cannot be trusted to manage our finances.”

Treasury’s modelling comes with a caveat that it is “heavily judgment-based”, after consultations with financial groups and analysis of relevant available data.

It also worked on the assumption the Government would need to win support for both its personal income tax and company tax cuts.

Cuts chance Senate,

MALCOLM Turnbull’s income tax plan will go to the Senate today despite not having full support from Labor.

The Federal Government’s seven-year, multi-phased plan brings in tax cuts for the coming financial year as well as abolishing an entire tax bracket in 2024.

Labor supports 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.

“Mr Turnbull is trying to hold hostage a tax rise for 10 million people this year so he can give thousands of thousands of dollars to other people in seven years’ time,” Opposition Leader Bill Shorten said in Latrobe yesterday.

Finance Minister Mathias Cormann has called on the Senate to pass both the income tax cuts as well as the outstanding company tax cuts, scheduled to be put to the test in the second week of sittings.

The company tax cut stalled in the Senate just before Easter, but the Coalition is only a few votes from getting the support it needs.

Senator Cormann warns if business taxes in Australia are kept high when other countries are substantially lowering theirs it be harder for businesses to grow and hire more people.

“Which means we will end up with fewer jobs and higher unemployment and lower wages,” he said in Canberra.

Upper House proceedings will kick-off with Labor’s David Smith being sworn in as an ACT senator, replacing Katy Gallagher, who fell foul of the dual-citizen debacle.

Opposition Senate leader Penny Wong said it would be a big occasion.