What the average family will lose if promised stage 3 tax cuts are scrapped by Albanese government

As Anthony Albanese fends off an internal push against the stage 3 tax cuts, economists say the controversial election pledge could finally give middle Australians some much needed relief.

Anthony Albanese is fending off attacks from the left of his party to water down the stage three tax cuts he promised at the last election, with party sources saying the cost of living crisis is a key reason why the policy will most likely survive.

Labor sources have revealed the pressure the Prime Minister has faced to meddle with a key election promise after he was caught in a breakfast TV interview refusing to guarantee the cuts, which would give financial relief to anyone earning more than $40,000 a year.

However, one Labor source said there was growing movement in the caucus in favour of the policy with more Labor MPs recognising it could help the “hurting” middle class.

“It’s becoming more acceptable (in the caucus). People in the middle are really hurting. This is one way to give back,” the source said.

“There will be other measures that will focus on the lower income earners...(the PM) and the Treasurer have both said that.”

Prime Minister Anthony Albanese and Treasurer Jim Chalmers are under increasing pressure. Picture Glenn Hampson

It’s understood there was intense upheaval against the policy after the election but the party room has had growing acceptance of the policy -- although privately, several MPs are still not on board.

When Mr Albanese was asked about the internal push back by the Daily Telegraph, a spokesman for the Treasurer responded: “Our position on the stage three tax cuts hasn’t changed.”

The average Australian full time worker earns $1600 a week — equalling an annual salary of $83,200 according to the latest data from the Australia Bureau of Statistics.

For a family with two full time working parents earning between $80,000 and $90,000 each — that would be between $875 and $1,125 per adult in savings if Prime Minister Anthony Albanese pushes ahead with the cuts.

So if both parents earn $80,000 a year, the family would lose out on $1750 in total if the tax cuts were abandoned.

Economist Saul Eslake. Picture: Chris Kidd

Economist Saul Eslake said the policy — which applies to anyone earning more than $40,000 a year — will benefit those Australians who have been most impacted by interest rate hikes and rent increases

“The people who earn less than $40,000 a year would be pensioners who technically own their homes outright and hence haven’t been affected by increased mortgage rates and may have even benefited from higher interest on their savings,” he said.

“Or those earning less than $40,000 are people who are renting but typically on social housing with fixed rents and hence they won’t have been much affected by raising rents and have benefited from government’s rent assistance increase.

“But otherwise the typical working family will get some cost of living relief from the state 3 tax cuts. That wasn’t what they were intended to do by the Morrison government but nonetheless that will be their effect.”

Ben Campton, with his son Alex, 5, from Riverstone, at Blacktown Showground, today. Picture: Justin Lloyd.

He added that giving the vast majority of the $14bn scheme to the wealthy would also add less pressure on inflation as they were unlikely to spend it.

Mr Eslake said outside of the tax cuts, any cost of living measures by the Albanese government should be aimed at people who are working but on very low incomes and who are renting

Riverstone dad-of-two Ben Campton, 38, together with his wife will get $2,500 in tax savings under the planned cuts.

“It would be something and we would take anything at the moment. $2,500 can go to a holiday or it can pay for two months of groceries,” he said.

“But is it something I’ll bank on, as in trust the government on it? No. If it comes through then great, if not then I’m not banking on it.”

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