Wentworth teal MP is urging Albanese not to scrap Stage 3 tax cuts

Wentworth MP Allegra Spender is urging the government not to scrap Stage 3 tax cuts and she has joined the call from economists for urgent broader tax reform.

Wentworth teal MP Allegra Spender has added her voice to a chorus of MPs and economists urging the government not to scrap Stage 3 tax cuts as “people have already made plans” based on them going through.

“We shouldn’t be taxing so much of working peoples’ income and that’s why I’ve supported Stage 3,” Ms Spender said.

“If the government puts forward changes, then I’ll ask my community what they think, but I’m worried people have already made plans based on the commitments that this government and the last have made.”

Ms Spender, who won her formerly blue ribbon Liberal seat off now-senator Dave Sharma in 2022 and helped deliver Labor to power, said that it was urgent that the government engage in much broader tax reform.

The bigger issue is that our tax system is too dependent on taxing the income of people who work … our current system isn’t fair to future generations, and it doesn’t help businesses either.”

Wentworth teal MP Allegra Spender says the major parties must commit to commit to proper tax reform to accelerate economic growths. Picture: NCA NewsWire

“We need the major parties to commit to proper tax reform that restores fairness between generations and helps accelerate economic growth,” she said.

Ms Spender’s call was echoed by economic forecaster Warren Hogan, who said that Australia’s 45 per cent tax rate on earnings over $180,000 a year was a “disincentive” to work in a time when labour markets were tight.

Independent Fowler MP Dai Le is calling for a redesign of our tax system. Picture: NCA NewsWire

“If we’re serious about productivity enhancements, those income taxes are a disincentive to people getting and staying in highly skilled professional work, particularly in the later part of their career.”

“We need to be encouraging higher participation rates among older skilled Australians,” Mr Hogan said, noting that countries such as Singapore enjoy tax rates capped at 22 per cent.

An analysis of top tax rates by the Australian Taxpayer Alliance found that Australia’s top marginal rate of 47 per cent kicks in lower than many comparable countries.

In the UK, the top tax rate takes effect from the equivalent of $240,000 per year, while in Japan it starts at $410,000 and in the US at $880,000.

According to independent economist Saul Eslake, Australia’s “steeply progressive” tax rates make it hard to cut taxes “without the biggest cuts going to people making the most.”

Mr Eslake said one option for the government to broaden the appeal of the cuts would be to reintroduce LMITO tax offsets and perhaps raise the tax free threshold.

However, not everyone agreed that the cuts should go through as is.

Independent MP Dai Le, who represents the western Sydney seat of Fowler, said “a redesign is appropriate to shift some of the cuts to the lower and middle income brackets due to inflation.”

“This will better suit what is currently happening in Australia.”

Originally published as Wentworth teal MP is urging Albanese not to scrap Stage 3 tax cuts