Shorten in tax cut pitch to wealthy
ALP LEADER SIDES WITH PM ON SMALL BUSINESS
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.
Bill Shorten with his Treasury spokesman Chris Bowen in Melbourne yesterday