Shorten in tax cut pitch to wealthy

ALP LEADER SIDES WITH PM ON SMALL BUSI­NESS

The Weekend Australian - - FRONT PAGE - SI­MON BEN­SON NA­TIONAL AF­FAIRS ED­I­TOR

Bill Shorten would con­sider ex­tend­ing low- and mid­dle-in­come tax cuts to higher-wage earn­ers and those on the top mar­ginal rate if and when the bud­get al­lowed for it, while vow­ing to use his $160 bil­lion elec­tion war chest to roll out the largest so­cial and eco­nomic re­form agenda since the Whit­lam govern­ment.

the move The Op­po­si­tion yes­ter­day po­lit­i­cal Leader repo­si­tion­ing to neu­tralise fol­lows his by a loom­ing bat­tle with the govern­ment over small busi­ness, declar­ing La­bor would now sup­port the govern­ment’s plan to fast-track the low­er­ing of the com­pany tax rate to 25 per cent for firms earn­ing un­der $50 mil­lion a year, hav­ing vowed to op­pose it less than four months ago.

In an in­ter­view with The Week­end Aus­tralian to mark his fifth year as Op­po­si­tion Leader, Mr Shorten yes­ter­day vowed not to be dic­tated to by the union move­ment on in­dus­trial re­la­tions re­form and re­jected the claim he was cam­paign­ing on class envy.

Mr Shorten said that a 49 per cent top mar­ginal tax rate, which he con­ceded was high, was not an ide­o­log­i­cal tax.

While his pri­or­ity was tax re­lief for those earn­ing un­der $120,000 a year, the La­bor leader said that when the govern­ment’s fi­nances were in bet­ter shape and on a long-term pos­i­tive trend he wouldn’t rule out more re­form, in­clud­ing at the top end of the tax scale. Mr Shorten con­firmed that the Ab­bott govern­ment’s 2 per cent deficit levy — which La­bor plans to reim­pose on the high­est wage earn­ers, tak­ing the top ef­fec­tive mar­ginal tax rate from 47 per cent to 49 per cent — would be re­assessed as soon as the bud­get re­turned to sur­plus. “We will re­view it when we don’t have a deficit … we would like to lower per­sonal in­come tax rates fur­ther but I will start with the 10 mil­lion Aussies who earn less than $120k … and we have of­fered a bet­ter tax cut than the Coali­tion,” Mr Shorten said. “It’s not in­def­i­nite.” He would also con­sider fur­ther in­come tax re­form that could even­tu­ally in­clude low­er­ing the top mar­ginal tax rate once the bud­get was re­turned to sus­tain­able sur­pluses and debt was un­der con­trol “We wouldn’t rule it out … but it’s not just about the top rate. We need a sus­tain­able sur­plus … our pri­or­ity is to en­sure par­ents can get their kids a good ed­u­ca­tion, when you are sick, you get to see a doc­tor and we have to do some­thing about the na­tion’s debt. And we need re­lief for low­er­in­come earn­ers.”

Scott Mor­ri­son laid out a seven-year tax cut plan in the May bud­get, which promised even­tual tax re­lief for all in­come-earn­ers up to $200,000 a year. The fi­nal stage of the tax plan promised to raise the thresh­old for the 32.5 per cent tax rate from $120,000 to $200,000 and re­move the 37 per cent tax rate from July 2024.

Un­der the govern­ment’s plan 94 per cent of tax­pay­ers would be pay­ing 32.5c in the dollar tax or

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less in 2024-25 com­pared with 63 per cent if there was no change.

Mr Shorten said that hav­ing a top rate of 49 per cent — one of the high­est of the OECD na­tions — was not a “re­sent­ment” tax.

“It is based on meet­ing all of our needs … it is not based on ide­ol­ogy,” he said. “It is not re­sent­ment … my idea is not about tear­ing peo­ple down.

“I be­lieve in a pro­gres­sive tax sys­tem, not a flat tax. We would like to do more re­form on per­sonal in­come tax but the bud­get has to be sus­tain­able and we also need to first en­sure our es­sen­tial ser­vices are funded and that in­cludes ser­vices such as de­fence and trans­port.

“My pri­or­ity in the first in­stance is to make space in the bud­get to look af­ter the tradies, the health­care work­ers, small­busi­ness own­ers.”

Hav­ing presided over one of the long­est pe­ri­ods of sta­bil­ity since tak­ing over the lead­er­ship fol­low­ing Kevin Rudd’s 2013 elec- tion loss, Mr Shorten said he would be an­nounc­ing the most “de­tailed and am­bi­tious” pol­icy agenda since the Whit­lam govern­ment’s Its Time cam­paign in 1972.

Mr Shorten said that while he would lis­ten to the union move­ment and was com­mit­ted to rev­ers­ing cuts to penalty rates and seek­ing a bet­ter wage deal for work­ers, he would not be dic­tated to by any­one in the in­dus­trial wing of the party.

“We are not go­ing to be dic­tated to by any­one … from any sec­tor of the Aus­tralian econ­omy,” he said.

Mr Shorten and op­po­si­tion Trea­sury spokesman Chris Bowen yes­ter­day an­nounced a sec­ond back­flip on cor­po­rate tax, jet­ti­son­ing shadow cabinet’s pre­vi­ous po­si­tion to op­pose fur­ther tax re­lief for small busi­nesses. This fol­lowed an em­bar­rass­ing re­ver­sal from Mr Shorten in June when he was over­ruled by shadow cabinet and forced to aban­don his pledge to re­peal the leg­is­lated tax cuts.

The Prime Min­is­ter moved this week to bring a cut from 30 per cent to 25 per cent for small- and medium-sized com­pa­nies for­ward five years, to ap­ply in 2021, at a cost to the bud­get of $3.2 bil­lion over the for­ward es­ti­mates.

The govern­ment plans to in­tro­duce the leg­is­la­tion when par­lia­ment re­turns next week.

Mr Bowen said the op­po­si­tion would pay for the move with a sav­ing of $2.8bn from de­lay­ing the roll­out of its in­vest­ment guar­an­tee by 12 months. The guar­an­tee would have given Aus­tralian busi­nesses the abil­ity to deduct 20 per cent of any new el­i­gi­ble as­set worth more than $20,000 from their tax.

“La­bor has al­ways been a friend of small busi­ness, and we want to pro­vide con­struc­tive cer­tainty, but unlike the Lib­er­als we will make sure we can ac­cel­er­ate the im­ple­men­ta­tion of the 25 per cent cor­po­rate tax rate with­out cut­ting fund­ing for schools and hos­pi­tals,” Mr Shorten said.

AAP

Bill Shorten with his Trea­sury spokesman Chris Bowen in Mel­bourne yes­ter­day

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