Malcolm Turnbull has ruled out changes to the Coalition’s seven-year $144bn income tax cuts, insisting that even an economic downturn would not prompt a rethink of the package legislated on Thursday.
On Sunday the prime minister and the finance minister, Mathias Cormann, defended the financial sustainability of income tax cuts and promised to push ahead with company tax cuts despite renewed signs One Nation and other crossbenchers will scuttle the package this week.
The passage of all three stages of the Coalition’s $144bn income tax cut package on Thursday has drawn political battle lines with Labor over its plan to rescind the cuts for high-income earners and offer more tax relief to low-income earners.
On Sunday Bill Shorten told reporters in Longman the Turnbull government had “written a cheque on the national credit card for $144bn for income tax cuts which principally go to the ... most well-off 20%”.
“This government is spending billions and billions and billions of dollars so they can get through the next election,” he said. “They haven’t explained how they pay for it.”
On ABC’s Insiders Cormann defended the income tax package as “economically responsible”, noting they were already reflected in the budget bottom line.
He questioned why Shorten was “locking Australia into higher spending and higher taxes” if he doubts Treasury forecasting of the state of the economy in 2024-25.
On Friday Turnbull said he would “would love to think that we would be able to bring some of these tax cuts forward, if the economy and the budget enables it”.
Cormann endorsed the comments, telling the ABC the Coalition’s commitment was “always to keep taxes as low as possible” and committing to pursue lower taxes if the economic situation allowed.
While Cormann deflected questions about whether a fiscal downturn could force a change to the already legislated income tax cuts, at a press conference in the Liberal-held seat of Reid in Sydney the prime minister was unequivocal.
“Absolutely not,” Turnbull said. “We’re very confident in our economic forecasts ... But if the economy were to soften in the years ahead, the last thing you would want to be doing is putting up tax.
“You would want to encourage – provide as much encouragement and incentive to people. So these settings are right.”
In the last sitting week before parliament rises on 28 June, the Coalition will return legislation to cut the company tax rate to 25% from 30% for companies earning more than $50m to the Senate, after failing to pass the bill in March.
On Sunday Cormann ruled out changing the threshold at which company tax cuts apply, rebuffing a plan from Senator Derryn Hinch to raise the threshold to $500m to exclude the big banks and other giant corporates.
“The same as we said we would not be splitting the personal income tax bills ... we will not be splitting the company tax cut plan from here,” he said.
“Our intention is to deal with it this week, and our intention is to secure the necessary support through the Senate, in order to legislate those business tax cuts in full.”
The company tax cut bill is set to fail, with the Coalition needing four more votes from Hinch, Centre Alliance’s Stirling Griff and Rex Patrick, the ndependent senator Tim Storer and One Nation’s two votes.
Both Pauline Hanson and the Centre Alliance have suggested they would be more likely to support company tax cuts if the government can raise up to $100bn from multinational companies including digital giants accused of profit-shifting.
Despite Hanson suggesting this week she is prepared to do a deal, she now appears to have ruled it out. “I have no intention of supporting corporate tax cuts,” the One Nation leader reportedly told Fairfax Media on Saturday.
Griff told Guardian Australia his party’s position was unchanged on company tax, and the government had not presented any proposal on a digital tax.
Hinch said the crossbench was doing the government a favour by insisting that tax cuts didn’t go to the big banks. “People tell me we can’t give tax cuts to banks when they’re stealing pennies off dead men’s eyes,” he said.
Labor’s chances in the Longman byelection were boosted by a ReachTel poll for the Australia Institute, released on Sunday, that showed Labor’s Susan Lamb level pegging 50-50 in two-party-preferred terms.
The ReachTel poll showed in Longman just one-third of voters in favour of reducing the tax for “large companies like banks, mining companies and supermarkets”, while in the seat of Mayo just one-quarter of voters were in favour.
