Samantha Maiden | Albo’s shame over $69bn ‘ugly baby’
Stage 3 tax cuts, which promise to shower Australian workers with cash, are Labor’s ugly baby – unloved and hidden out the back, writes Samantha Maiden.
Opinion
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Nearly five years ago when Scott Morrison hailed the passage of the government’s income tax cuts package as a victory for “quiet Australians”, Labor capitulated and voted for the 10-year plan.
“This is a win tonight not for the government, not for the Liberal or National parties, this is a win for those hardworking Australians quietly going about their lives,” Scott Morrison said.
“These are the people we will keep our faith with every single day, I said we would burn for them, and that is exactly what we have been doing.”
Burn he might – the Morrison government was fried to crisp at the next election by voters, who decided to pocket the promised tax cuts and elect a new Prime Minister.
Voters are like that sometimes. Brutal. But because Labor remained divided over the tax cuts it could never quite bring itself to celebrate the tax cuts.
The Stage 3 tax cuts, which promise to shower Australian workers with cash from July 1 are Labor’s ugly baby, unloved and hidden out the back but rolling in cash. It’s a weird situation. Having backed the tax cuts Labor should be out there spruiking what workers are going to get.
Try this. It has been publicly disclosed that these tax cuts are estimated to cost around $69 billion over the forward estimates period to 2026-27.
In other words, Anthony Albanese and Jim Chalmers are about to hand back $69 billion to workers but – shhh – they don’t want to talk about it.
Having decided to back them, they should be out there selling what workers will get.
Instead they keep getting tangled up in word games that fuel suspicions they still want to perform surgery on the tax cuts to trim the largesse at the big end of earners to improve the relief for low and middle income earners. It’s very weird. They want to hand out $69 billion but they are also slightly ashamed by it.
Seriously, sometimes I wonder if they need to get a grip.
Way back in 2019, Labor leader, Anthony Albanese declared that the shadow cabinet had decided it would not stand in the way of relief for “working Australians”.
Initially, Mr Albanese said the party reserved its right to repeal the third stage of the package, but would be reassessing its position before the next election based on economic circumstances at the time.
Speaking in the Senate, Labor’s Penny Wong said the party still believed it was “irresponsible” to support stage three of the tax package, accusing the government of holding tax cuts for low- and middle-income earners “hostage”.
Unions were never big fans either, with ACTU secretary Sally McManus railing against the tax cuts.
“Someone on $50,000 will be paying the same tax as someone on $200,000,’’ she said.
Putting to one side that’s not accurate – someone on $200,000 pays about $60,000 a year in tax and someone on $50,000 pays around $6,000 – against this backdrop it is no surprise that questions have remained over Labor’s commitment to the tax cuts.
But by July 2021, Anthony Albanese had confirmed the party would keep stage 3 tax cuts if it won the next election
That was despite Jim Chalmers previously describing the Stage 3 tax cuts as the “least affordable, least fair and least likely to be effective because higher-income earners aren’t as likely to spend in the economy as workers of more modest means”.
Understandably Labor was peppered with questions during the election and again and again Anthony Albanese promised the tax cuts would be delivered as legislated.
And as the arrival of those tax cuts grow closer, questions have continued over the efficacy of the tax cuts given rising inflation.
On Wednesday, Mr Albanese dropped the word games and pledged that promised tax cuts “will happen” from July. It followed weeks of speculation ensuring that most workers are better off and those earning over $200,000 score a whopping $9000 a year tax cut.
Admittedly, there’s a big gap between what some workers get and others with those earning $45,000 scoring just 43 cents-a-week in tax break.
For high income earners on $200,000 a year or more the tax cuts are worth $9000 a year or $756 a month from July 1, 2024.
A worker on $200,000 a year currently pays $60,667 to the Australian Tax Office but will only pay $51,592 in taxes after the changes.
By comparison, if you currently earn $50,000 you are paying $6717 in tax and $6592 after the changes, delivering a tax cut of just $125 a year.
But if they are dishing the cash out they need to take a deep breath and lean in. The tax cut baby is their baby now. They should learn to love it lest voters think this is the weirdest tax cut of all, the $69 billion the government never really wanted you to have.
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