Malcolm Turnbull has confirmed he will introduce the rest of his company tax cuts to parliament this year, in an attempt to build on his tax cuts for companies with $50m turnover.
But he has hedged on the question of personal income tax cuts, saying taxes should be lower generally but it is a matter of “affordability” for the budget.
Speaking at a Melbourne Institute conference on Thursday, Turnbull laid the groundwork for a potentially-bruising second half to the year, confirming he will pursue the rest of his controversial $65.4bn tax cut plan in the Senate in coming months.
His plan is unlikely to pass the Senate because Labor, the Greens, the Nick Xenophon Team’s three senators and senator Jacquie Lambie have already said they will not support it. That means the centrepiece of his budget – the 10-year enterprise tax plan that intends to cut taxes for all companies, not just those with a turnover of $50m or less – is likely to stall in the Senate, forcing his government to significantly adjust its budget plans and potentially abandon swathes of it.
“That will all be introduced, it’ll be debated in the Senate before the year’s end,” he said.
When asked about the prospect of pursuing personal income tax cuts in coming years, he was more circumspect.
“Well our view is that, ideally, tax should be lower,” Turnbull said. “Clearly all taxes have an economic cost, particularly business taxes ... but plainly the issue is affordability.”
He said the government’s move to lift the $80,000 threshold to $87,000 had been “a valuable middle-income tax cut” and that his refusal to extend the deficit levy, “gives you an indication that we feel already our personal tax rates are high and our top marginal rate is high by global standards”.
Turnbull said some people kept doubting the government will get legislation passed in the Senate, and said he could only work with the Senate he faced. “The budget that we brought down ... this year is a very realistic budget.”
Chris Bowen, the shadow treasurer, told the conference the Coalition’s business tax cuts were being paid for by an increase in personal income taxes.
“As the Parliamentary Budget Office’s recent report showed, the average tax rate on personal income will rise from 22.7% to 25.9% over the medium term,” he said on Thursday. Of the total real growth in tax receipts over the next decade, the PBO estimates that 56% owes to higher taxes on workers.”
In a radio interview on Thursday, Turnbull warned homeowners and buyers that interest rates were more likely to go up than down. “They [the Reserve Bank] are not saying they are going to [higher rates] tomorrow but they are sending a signal that is probably prudent, which is ‘ladies and gentlemen, just be aware rates are more likely to go up than go down’,” he said. “What everyone should do is not to get over committed.
“As we all know, it’s not rocket science, you’ve got to be careful about not getting over committed and don’t assume that asset prices are always going to go in one direction.”
