National

PM playing hardball on income tax cuts

By AAP Newswire

Malcolm Turnbull has pledged not to back down on the government's complete income tax cut package, despite the Senate dumping the final stage of the plan.

Income tax cuts for people earning up to $200,000 from 2024 were split from the bill on Wednesday after Labor, the Greens, Centre Alliance and independent Tim Storer rejected stage three of the package.

"It is now incumbent on the government to accept the will of the parliament," shadow treasurer Chris Bowen told reporters in Canberra on Wednesday.

Pauline Hanson has hinted she could support the full package, with the two One Nation votes shaping as crucial for the government.

Mr Bowen took aim at Senator Hanson for siding with the government after earlier being reluctant to confirm which way she would vote.

"If there is a side deal between Senator Hanson and the government, they should 'fess up about it today," Mr Bowen said.

The government will restore the package to its original form in the House of Representatives where it controls the numbers, before bouncing the bill back to the Senate for approval.

The prime minister told reporters "of course" the government will try again to pass the entire tax package.

The government gagged debate in the Senate before passing the bill which will be rushed back to the House where stage three of the cuts will be restored on Thursday.

The legislation will then return to the upper house where the government will once again attempt to pass the entire package.

Earlier, Senator Hanson signalled she may support the government's seven-year, three-stage income tax package - but warned stage three of the plan may be unaffordable.

The One Nation leader wants the government to force multinational companies to pay more tax and politicians to refuse wage rises to pay for tax relief.

"Hardworking Australians need a helping hand - they need to know they are going to get something back," she told parliament.

Under the package's first stage, a new low- and middle-income tax offset worth up to $530 for individuals would come into effect next month.

The top threshold of the 32.5 per cent tax bracket will increase from $87,000 to $90,000.

Labor supports those measures but is against further reductions due in 2022 and 2024.