Coalition won’t block stage 3 tax cuts despite Labor’s broken promise

The Coalition will not stop Labor’s stage three tax cuts flowing to workers, as Treasury officials concede they don’t know how many Australians will pay more over the next decade.

The Coalition will not stop Labor’s stage three tax cuts flowing to workers, as Treasury officials concede they don’t know how many Australians will pay more over the next decade.

The Opposition will formalise its final position on the federal government’s revamped tax package at a party room meeting on Tuesday, but multiple senior Liberal sources have confirmed the party would ultimately not stop the cuts reaching Australians.

Labor has claimed its stage three overhaul better addresses bracket creep by returning more money to lower and middle income workers compared to the original legislation.

However, Treasury officials appearing before a cost of living committee hearing on Monday admitted they do not know how many people would pay more tax over ten years under the changes.

First Assistant Secretary in the Tax Analysis Division, Damien White, said the bottom 70 per cent of income earners would “better off” over the decade.

Labor will introduce its stage three tax cuts bill to parliament on Tuesday. Picture: NCA NewsWire / Martin Ollman

But when asked how many Australians would be paying more tax due to bracket creep Mr White said he did not have a number.

“I would have to take it on notice,” he said.

Treasury modelling released by Labor estimated the tax changes would bring in an extra $28 billion in revenue by 2034, largely due to bracket creep hitting higher earners.

The committee also heard Treasurer Jim Chalmers did not specifically ask his department to look at stage three tax cuts before Labor ultimately decided to break its election promise.

Treasury deputy secretary for revenue group Diane Brown said the stage three revamp was “not done at the request of the Treasurer”.

Prime Minister Anthony Albanese says Labor’s stage three changes are about “helping people”. Picture: NCA NewsWire / Martin Ollman

She said Treasurery Secretary Steven Kennedy had been “thinking about how to provide cost of living relief in a way that didn’t add to inflationary pressures”.

Mr Chalmers had asked his department to come up with options to ease cost of living pressures in December, with Labor ultimately deciding to backflip on stage three in January.

Two thirds of Australians support the tax changes, according to the latest Newspoll, however backing the new package has not translated into increased support for Labor.

Even if proposed amendments to Labor’s bill failed, the Coalition plans to vote in favour of putting extra money into workers’ pockets.

Coalition treasury spokesman Angus Taylor has called Labor’s tax backflip an “egregious breach of trust”. Picture: NCA NewsWire / Martin Ollman

Anthony Albanese on Monday attempted to further wedge the Coalition on Monday by suggesting a vote in favour of Labor’s version of stage three amounted to confirmation it was better than the original.

The Prime Minister told his colleagues at a Labor caucus meeting he was happy to have the debate in parliament over stage three as it was “about looking after people”.

Coalition treasury spokesman Angus Taylor said Labor’s broken promise was the “most egregious breach of trust” he had seen.

“We will take our time to get the right outcome here for the Australian people,” he told Sky News on Monday.

“But as always, we support simpler, lower, fairer taxes.”

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Originally published as Coalition won’t block stage 3 tax cuts despite Labor’s broken promise