Crucial crossbench senator Tim Storer has called on the government to divide its bill to cut personal income tax, and offered to join Labor and other crossbenchers to support the first round of cuts this year.
The government wants to pass the three stages of its tax plan in one bill, forcing senators to vote on both the 2018 cuts, which mostly benefits low and middle-income earners, while also locking in future cuts in 2022 and 2024.
The future cuts are more controversial with the opposition and minor parties, especially the 2024 cut, which will remove an entire tax bracket so those earning between $41,000 and $200,000 are taxed at the same marginal rate.
Senator Storer joins Labor, One Nation and the Centre Alliance in calling for the bill to be split so they can support just the first stage, which will deliver a permanent tax refund for those earning up to $125,000 worth up to $530 per year.
“I do not believe it would be prudent to pass the whole tax package,” Senator Storer said.
“[But] I am satisfied that the measures set to commence from 1 July 2018 are affordable and would be happy to pass those sections of the bill.”
“Given rising cost of living pressures and wage stagnation, the tax relief significantly targeting low and middle income earners is particularly warranted and should be locked in.”
But the senator, who now sits as an independent after leaving the former Nick Xenophon Team, said he would not support the future cuts.
The 2022 and 2024 measures will collectively cost the Australian economy around $120 billion in lost revenue.
“Geopolitical and economic uncertainties as noted by Treasury in Senate Estimates demand that the Government be prepared by focussing on debt and deficit reduction as well as maintaining the services voters expect,” he said.
“We are in a substantially weaker budgetary position now than we were in 2007 at the lead in to the Global Financial Crisis.”
But treasurer Scott Morrison is still insisting the tax cuts must be passed in a single bill.
“We are putting the whole package to the Senate,” Mr Morrison told reporters in Canberra.
“Labor doesn't believe in tax relief for all Australians. Their tax plan is driven by envy, they are not driven by economics.”
The well-supported first round of tax cuts are supposed to kick in on July 1, depending on whether the laws pass the house.
To achieve that deadline, the government has just two more weeks to pass the tax cuts from when parliament sits again on June 18.