‘Follow closely’: How Chalmers reacted to call for tax cut reconsideration

The IMF is the latest body to weigh in on the Federal Government’s contentious stage-three tax cuts, but Treasurer Jim Chalmers remains defiant.

Treasurer Jim Chalmers is set to push ahead with stage-three tax cuts for now, despite an international report warning tax reform is needed to pay for increasing spending.

The report, from the International Monetary Fund on Wednesday night, all but called for the stage-three tax cuts – due to come into effect in July 2024 – to be reconsidered to create a Budget buffer against future economic shocks.

Mr Chalmers said multinational companies, rather than scrapping stage-three tax cuts, were in his sights for repair of the coming Budget.

But leaving the door ajar, he said he “followed closely” those calling for the tax cuts worth up to $2000 to many Australians to go.

Treasurer Jim Chalmers

Labor promised during the election it would not touch the already legislated tax cuts, but the government has been under pressure from some economists, unions and Greens to scrap them to save $240 billion over 10 years.

Despite the IMF’s report, Mr Chalmers said the government’s position had not changed on stage three.

“That’s not our intention … I’m aware and follow closely the constituency calling for those tax cuts to be rewritten or junked,” he said.

“The IMF has made a contribution to that. “We listen respectfully when those kinds of suggestions are made, but the government’s approach to the stage-three tax cuts hasn’t changed.”

He said he had other priorities, which would be revealed in the May Budget.

“If there’s an avenue for responsible tax reform into the future, like what we’re doing with multinationals, then obviously those opportunities and avenues should be explored,” Mr Chalmers said.

The multinational company tax crackdown included in Labor’s October Budget was forecast to reap in just $950 million, about half of the $1.8 billion promised at the election.

Opposition treasury spokesman Angus Taylor said the IMF report also made it clear the government needed to rein in spending to alleviate pressure on the Budget and inflation.

“You can’t tax your way out of a spending problem,” Mr Taylor said.

“The Coalition will not support tax changes that increase the tax burden on the economy, sap productivity, raid people’s retirement or make inflation worse.

“It is even more important Labor keeps its promise on tax policy by honouring stage-three tax cuts.”

Mr Chalmers said there were pressures on the Budget, including the cost of servicing the debt, the NDIS, defence, aged care and health.

“We need to make sure that we’ve got the tax system that can sustain the funding that we want to see in our areas of national priority,” he said.