What a day for Scott Morrison!
He sees his tax cuts sail through parliament without a whimper from a Labor party that had opposed them tooth and nail right through the election and up to a day or two ago. He has proved that he is a master politician. He becomes unchallengeable within his party now. His triumph over the robotic Bill Shorten was arguably a triumph of personality but this is a triumph of policy.
The future rate of 45% for top earners is a concern but will not hit many people. It is also an economically sophisticad rate. The recent British experience has shown that 45% is as high as you can go without significant backlash. When Gordon Brown raised the top British rate to 50%, an exodus of the rich -- mainly to Switzerland -- began and total British tax receipts dropped. After that, the top rate was hastily dropped back to 45% and the exodus stopped
Scott Morrison’s $158 billion tax cut package has passed parliament after Labor backflipped and voted in favour of the entire plan.
The Senate passed the package with the support of 56 senators compared to nine Greens who voted against the proposal.
One Nation senators Pauline Hanson and Malcolm Roberts abstained.
Scott Morrison declared more than 10 million Australians would receive immediate tax relief.
“Starting from next week, low and middle income earners with an income up to $126,000 will receive up to $1080, or $2160 for dual income couples, with the increased tax relief to apply from the 2018-19 income year,” the Prime Minister said in a joint statement with Treasurer Josh Frydenberg and Finance Minister Mathias Cormann.
“The bill has also locked in the benefits of low and middle income tax relief by increasing the top threshold of the 19 cents in the dollar tax bracket from $41,000 to $45,000 and by increasing the low income tax offset from $645 to $700 in 2022-23.
“In combination with the legislated removal of the 37 per cent tax bracket in 2024-25, the government is delivering structural reform to the tax system by reducing the 32.5 cents in the dollar tax rate to 30 cents in the dollar.
“Together, these tax relief measures will create a flatter and better tax system that will improve incentives for hard-working Australians and ensure that 94 per cent of Australians will face a marginal tax rate no higher than 30 cents in the dollar in 2024-25.
“Once our plan is fully implemented, around 13.3 million taxpayers will pay lower taxes.”