Anthony Albanese to defend broken promise on tax cuts in major speech

Anthony Albanese will defend his broken promise on tax cuts in a major speech, calling it “the right decision, for the right reasons”.

Anthony Albanese will defend his broken promise on income tax cuts in a major speech as “the right decision, for the right reasons”.

Revealing that workers on $73,000 will get “double” the tax cut promised by Scott Morrison the Prime Minister will also reveal a new low income threshold for the Medicare levy.

“Today I also announce we will be increasing the low income threshold at which the Medicare levy applies,’’ Mr Albanese will say.

“Meaning 1.2 million low-income earners either remain exempt from paying the levy, or will pay less in tax.”

“But it doesn’t stop there.

“We are cutting the second tax rate from 32.5 per cent down to 30 per cent – and that will now apply all the way to $135,000.

“We will be retaining the 37 per cent rate, which will now apply from $135,000.

“And the top tax rate of 45 per cent will now kick-in at $190,000, up from $180,000.”

After weeks of insisting “the government’s position has not changed” the Prime Minister will concede today that is no longer the case.

But he will insist the political backflip doesn’t matter because most workers will be better off.

“Our plan will more than double the benefit for Australians on the average income,’’ Mr Albanese says.

“And it will look after low income earners and part-time workers as well.

“So, someone working at Australia’s largest employer Woolworths earning $40,000 will now get a tax cut of over $650.

“Under Scott Morrison’s plan, they would have got nothing.”

The Prime Minister will defend his broken election promise to honour the Stage 3 tax cuts during a televised speech to the national press club.

“The average wage in Australia is $73,000,’’ Mr Albanese will say.

“A person earning that will now get a tax cut of more than $1,500 a year.

“More than double what they would have got, under the plan Scott Morrison put forward.”

Pre-prepared ALP advertisements will also be rolled out online that claim “the world has changed” since the tax cuts were first announced and as such, “so we are doing the responsible thing” and ensuring that “more people get a bigger tax cut.”

“Some would say that we should stay the course, even if it means going to the wrong destination,’’ Mr Albanese says.

“To them I say, we are choosing a better way forward given the changed circumstances.”

Under the changes, Mr Albanese said that all 13.6 million taxpayers will receive a tax cut – although some high income workers will receive less than expected.

“Everyone who works and pays tax will benefit,’’ he said.

“The first element of our plan reduces the lowest rate of income tax from 19 cents in the dollar, down to 16 cents,’’ he says.

“This change means that taxpayers earning less than $45,000 will now receive a tax cut.

“And every working Australian will pay less tax on the first $45,000 that they earn.

“An early educator, or an aged care worker or a cleaner earning $50,000, will receive a tax cut worth $929 a year.”

Treasurer grilled on tax cuts

The speech comes as treasurer Jim Chalmers defended the government’s broken promise over the Stage 3 tax cuts insisting the changes provide “more help for more people” including women, in a heated interview with the ABC.

The architect of the new tax package was hit with a brutal question as he confirmed for the first time that the government was dumping the election promise not to fiddle with the tax cuts.

“That’s obviously a huge political call. Why should voters trust the government’s promises in the future?’’ 7:30 host Laura Tingle asked.

“Well, we have changed our view, and we’ve changed our view because we’ve found a better way to provide more cost-of-living relief to more people in a way that doesn’t add to inflation,’’ the Treasurer replied.

“And so the proposal that the Prime Minister will put forward tomorrow means more help for more people.

Jim Chalmers on 730 tonight. Picture: 730

“It means a tax cut for every taxpaying worker, and it will be better for Middle Australia – better for cost-of-living pressures, better for women.”

One of the criticisms of the Morrison government’s original Stage 3 tax cuts was that because men tend to be higher income earners, most of the big tax cuts worth $9,075 went to them.

But by redesigning the tax cuts to give more to low and middle income earners women will be better off under the proposed changes.

The Treasurer has long been an opponent of the Stage 3 tax cuts, describing them privately as “offensive” in 2019 before falling into line, backing the changes and pledging not to overturn them.

Millions of Australian workers earning between $45,000 and $135,000 are set to enjoy an extra $804 a year under the PM’s tweaked cuts.

The Robin Hood tax strategy emerged as Labor MPs unanimously approved the changes, which are believed to include reducing the lowest tax bracket of 19 cents in the dollar to 16 cents.

The 37 per cent tax rate will also remain in place slashing the benefits for workers earning over $150,000.

But the biggest losers are workers earning $200,000 or more who will see a planned $9075 annual tax cut slashed in half to just $4546.

A new analysis of the planned tax cuts commissioned by news.com.au based on what we know so far suggests that workers earning between $45,000 and $135,000 will secure an extra $804 a year.

But when you combine that with what they were already going to get under the original changes a worker earning $100,000 was going to get a $1375 tax cut and will now secure $2179.

If you earn $180,000 your promised tax cut will be slashed by $2346 a year. If you earn $200,000 you will be worse off by $4546.

By lowering the 19 per cent tax rate to 16 cents in the dollar, it will deliver a tax cut to “everyone” with earnings between $19,000 and $45,000.

Mr Albanese also proposes to reduce the 32.5 per cent tax bracket to 30 cents in the dollar for earnings between $45,000 and $135,000.

Deputy Opposition Leader Sussan Ley pledged the Coalition will roll back any changes made by Anthony Albanese on the stage three tax cuts if they win the next election.

“This is absolutely our position. And the point is, it was Labor’s position too. The promise that’s been made, the promise that’s been broken, the lies that have been told to the Australian people,” she told Sky News.

Sussan Ley pledged the Coalition will roll back any changes made by Anthony Albanese on the stage three tax cuts if they will the next election. Picture: NCA NewsWire / Martin Ollman

“All of this has been decided without proper consultation with the Australian people.

“The election was won on a lie.”

But the Treasurer seized on those remarks to suggest the Coalition planned to wind back the extra cash for low and middle income earners.

“The Deputy Opposition Leader says the election was won on a lie,’’ Ms Tingle said.

“And as I understand it, the Deputy Opposition Leader said today that if they are elected, they will unwind these changes,’’ the Treasurer said.

“That means the Liberals and Nationals are going to the election with a policy to increase taxes on Middle Australia in order to fund even bigger tax cuts for people on the highest incomes.”

Dr Chalmer said that he did not think high income earners would be angry.

“Oh, I don’t think so. I think when they see the package tomorrow, people will appreciate that there is a tax cut for all taxpayers,’’ he said.

“And that is deliberate. We’re not in the business of setting people against each other when it comes to these tax changes.

“The many will benefit from this, rather than the few.”

The Prime Minister’s office has repeatedly insisted there were no current plans to alter the tax cuts – a claim now proven to be false.

Originally published as Anthony Albanese to defend broken promise on tax cuts in major speech