MELBOURNE (Reuters) – Australia’s main opposition party said on Sunday it wanted more information on the government’s tax cuts before committing to supporting the full A$158 billion ($109 billion) package when parliament resumes next month.
The proposed tax reforms are to take place in three stages spread over several years, and the opposition’s key sticking point has been the final stage that will benefit higher earners. It would be worth A$95 billion ($65 billion) and won’t come into effect until 2024.
Speaking to the ABC television’s Insiders program on Sunday, Labor’s treasury spokesman Jim Chalmers said his party’s priority was the first stage of those cuts, aimed at middle and lower income earners.
“Our highest priority is to get money into the hands of workers and flowing through an economy which desperately needs it,” Chalmers told Insiders.
Chalmers said since the third stage of the tax cut wouldn’t apply for another five years, they wanted further details before agreeing to support the package.
“We want to know how the $95 billion is distributed through the various tax brackets,” Chalmers said. “Because what we do know is that you get most bang for buck when you give that tax relief to people who are most likely to spend it in the economy.”
The center-left opposition was widely tipped to win the federal election in May and internal debates about the party’s economic policy direction have taken place following the shock election loss.
Australia’s conservative Liberal-National coalition’s tax reforms were a major part of its re-election bid and will be a focus for the government when lawmakers return to parliament for the first time since the election — expected to be in the first week of July.
The immediate effect of the government’s reforms will double the tax rebate for people earning between A$48,000 and A$90,000 a year to A$1,080, while the 2022-23 changes will see income bands widened, and the 2024-25 reforms will reduce the 32.5 per cent tax rate to 30 per cent for people earning up to A$200,000.
On Thursday, Australia’s Reserve Bank Governor, Philip Lowe, said the recent cut in interest rates would not be enough to revive economic growth and called for more action from the government on fiscal stimulus.
Economists have estimated the tax breaks would inject about A$7.5 billion into the economy over 2019/20.
($1 = 1.4445 Australian dollars)
Reporting by Will Ziebell; Editing by Simon Cameron-Moore