Australia

Labor warned tax 'stain' will haunt party

Labor is under pressure to support the coalition's $158 billion tax cuts package. (AAP)

Not passing the coalition's promised tax cuts would hurt Labor at the next election, Trade Minister Simon Birmingham has suggested.

Trade Minister Simon Birmingham says not supporting the coalition's full $158 billion tax cuts package would be "a stain on the Labor Party that will last all the way through to the next election".

The coalition needs the support of Labor or four of six crossbenchers to get its full three-stage plan through the Senate when parliament resumes this week.

So far the opposition has refused to play ball, offering to support extra tax relief only if the second stage of the package is brought forward and the third stage is shelved.

Labor frontbencher Katy Gallagher said the party will consider its position on the package when its caucus meets early this week.

But what they decide may not be the party's final stance, as they keep an eye on whether the government gets enough crossbench support.

"We would have to take decisions based on what was happening at the time," Senator Gallagher told Sky News on Sunday.

"There's always elements of having to make decisions as the situation unfolds in parliament."

Senator Birmingham said the Labor proposal was not what the coalition took to the election, from which it emerged victorious.

"We want to make sure that people get every cent, every dollar that we promised," he told ABC's Insiders on Sunday.

"The Labor Party need to end the verbal gymnastics about exactly what their final position will be.

"It is a stain on the Labor Party that will last all the way through to the next election if they block and vote against tax relief for hardworking Australians."

The first stage of the plan will mean up to $1080 extra for low and middle-income earners when they lodge their tax returns in the coming months, as an offset for them is doubled.

Labor wants the second stage, which is due to kick in from 2022/23, to be brought forward to the coming financial year.

That stage will top-up a low income tax offset and mean more people - earning up to $45,000 instead of $41,000 - will get a 19 per cent tax rate.

The final stage will flatten the tax rate from 32.5 per cent to 30 per cent for people earning between $45,000 and $200,000 from mid-2024.

Among Labor's concerns about the third stage are that it will be locked in too far in advance and there may not be enough money in the budget to pay for it.

The opposition is also concerned too much of the benefit may flow to people earning more than $180,000 each year, who are less likely to spend the cash and stimulate the economy.

Modelling released on Friday by the Parliamentary Budget Office showed 22 per cent of the total package will flow to people earning more than that figure.

Stay up to date with SBS NEWS

  • App
  • Subscribe
  • Follow
  • Listen
  • Watch