May 22, 2018 / 3:15 AM / 7 months ago

Australia far-right party rejects proposed tax cut, adding to PM's woes

SYDNEY (Reuters) - Australia’s far-right One Nation party said on Tuesday it will not support the government’s proposed corporate tax cut, all but ending Prime Minister Malcolm Turnbull’s hope for a policy victory ahead of a series of by-elections.

FILE PHOTO: Australia's Prime Minister Malcolm Turnbull and German Chancellor Angela Merkel (not pictured) address the media following their talks in Berlin, Germany, April 23, 2018. REUTERS/Fabrizio Bensch/File Photo

Turnbull’s Liberal-National coalition government had proposed to reduce the corporate income tax rate by 5 percent to 25 percent for all companies by 2026-27.

The legislation has been stalled in the Senate where the government is in the minority and was struggling to win the support of enough independent lawmakers.

“The people in general don’t want it. It has not been well­received,” One Nation leader Pauline Hanson told The Australian in an interview published on Tuesday.

The opposition Labor Party, The Greens and several independent lawmakers have said they will not back the bill.

Without One Nation and its three votes in the Senate, Turnbull’s centre-right government is well short of securing enough support for the tax measure, analysts said.

“I am obviously very disappointed with this latest development, but self-evidently I hope this is not the last word,” Finance Minister Mathias Cormann told reporters in Canberra.

The stalled tax legislation is the latest problem facing Turnbull ahead of five by-elections triggered when a group of opposition lawmakers were forced from office after being deemed dual nationals this month.

Dual citizens are blocked from national elected office under Australia’s 117-year-old constitution.

The dates of the by-elections have yet to be set but Turnbull’s Liberal Party is leading opinion polls in the race for the Queensland state seat of Longman.

A victory there would give his coalition a two-seat majority from the current one seat, but analysts said the troubled tax cut and other setbacks limited the impact of a by-election win.

“These failures build a perception of a prime minister who appears weak and unable to secure reform,” said Haydon Manning, a political science professor at Flinders University in South Australia state.

With just a razor thin majority, Turnbull has been forced into a series of policies that he had previously opposed, most notably a powerful inquiry into the country’s financial sector.

Turnbull also faces internal pressure over the issue of live sheep exports after the death of 2,400 animals on a ship bound for the Middle East, prompted widespread criticism of the A$250 million ($190 million) industry.

The government introduced tougher oversight of the shipments, though a group of rebel backbenchers on Monday proposed a blanket ban - exposing fractures within the coalition government.

($1 = 1.3186 Australian dollars)

Reporting by Colin Packham; Editing by Darren Schuettler

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