New information provided by the independent Parliamentary Budget Office to the Senate Economics Legislation Committee today at the request of Labor senators, shows Stage 3 of the Turnbull Governments income tax cuts hitting $10.4bn a year by 2028-29
Based on the PBO data, Stage 3 of the Governments tax cuts are set to grow at a staggering 12 per cent a year, much faster than any other component of the income tax cut package.
This has a major structural impact on the medium term Budget, particularly when combined with the Governments big business tax cuts which are due to mature over this period.
The tabled PBO analysis also shows that the financial benefits of Stage 3 of the package overwhelmingly flow towards men over women at a ratio of 3:1 with $30 billion of the $41.6 billion in Stage 3 tax cuts flowing to men.
Its not surprising that Scott Morrison has stopped Treasury from releasing the year-on-year costs of the Governments income tax cut plan its not a pretty picture. By the end of the medium-term (2028-29), Stage 2 of the plan costs $13 billion a year as the Stage 3 costs rise to over $10 billion.
The evidence on the Stage 3 tax cuts is now in theyre expensive, the fast growing stage of the package, and they are the most unfair.
The Stage 3 tax cuts are projected to grow at more than twice the rate of projected nominal GDP growth, an indication of how fiscally irresponsible this is.
The Treasurer continued his charm offensive on the income tax cut plan on Sky AM Agenda this morning with no answers on what happens to the tax cuts if a global shocks sees revenue fall away in the future and instead repeating his claim that year-on-year costs of his plan were unreliable and rubbery. Thats the basis on which Scott Morrison wants the Senate to pass the entire package. Some sales job.
Stage 3 of the income tax cuts that are heavily skewed towards higher income earners begin in 2024-25, just about the same time as the Governments company tax cuts flow to big business at an annual cost of at least $15 billion a year.
Taken together, if implemented the Governments stage 3 tax cuts and the company tax cut for big business will cost the budget at least $25 billion a year by the end of the medium term.
Evidence provided by the Grattan Institute and other think tanks and peak bodies show the benefits of Stage 3 of these tax cuts flowing overwhelmingly to high income earners.
Given there is a clear majority in the Parliament for Stage 1 of the income tax cuts plan, the Turnbull Government should split its legislation so that tax relief can begin to flow from 1 July 2018, and if the Turnbull Government wants to do better for low and middle income earners it should support Bill Shortens bigger, better and fairer income tax cut plan.
