Labor set to break Stage 3 promise to redirect tax cuts to low and middle income earners
The PM has been accused of winning the 2022 election on a “lie” after his stage three tax cuts backflip, as the Coalition suggests it will wind back Labor’s changes if elected to government. WATCH the Labor ministers who never supported Stage 3 cuts.
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Anthony Albanese has been accused of winning the 2022 election on a “lie” about stage three tax cuts, as the Coalition suggests it will wind back Labor’s changes if elected to government.
Deputy Liberal Leader Sussan Ley said delivering the tax package as originally legislated was “absolutely” the Coalition’s position.
“The point is, it was Labor’s position too,” she told Sky News.
“The promise that’s been made, the promise that’s been broken, the lies that have been told to the Australian people.”
Ms Ley said Labor’s looming changes to redirect tax cuts from higher earners to low and middle income workers had been decided “without proper consultation with the Australian people”.
“Of course we support the legislation that we were party to, and that Labor agreed to,” she said.
“And there’s no way in the world we’re going to back in higher taxes and an attack on aspirational Australians and a Prime Minister that’s lied to Australians, no way in the world.”
Ms Ley accused Labor of lying about tax to win the 2022 election.
“This was the plan all along and we can see it now,” she said.
“The election was won on a lie.
“Every single Labor MP lied to their community, and they need to stand up and explain that today and in the days ahead.
“I don’t think the Australian people accept an Australian leader who lies to their face.”
Meanwhile, the Greens have thrown their support behind changes to the Stage 3 tax cuts- claiming the current framework “turbocharges inequality.”
During a press conference in Sydney- acting Greens leader Mehreen Faruqi said the legislated reforms were “created by Scott Morrison to give politicians and billionaires a big tax cut.”
“Labor will have to make some very serious changes to these tax cuts to be able to help everyday working people” said Senator Faruqi.
“We don’t know what changes Labor is planning, but we do know there is only so much you can do to dress up a policy that turbocharges inequality.”
South Australian Premier Peter Malinauskas urged the PM to not break election promises hours before a snap caucus meeting today.
“My view is that as a country, we have been taxing workers too much,” Peter Malinauskas said on The Today Show on Wednesday.
“I think we tax labor the very thing we encourage people to do the most, work hard, we tax the most, and I don’t know if those incentives are in the right spot. Let’s wait and see what the Prime Minister announces.”
The premier said middle income earners are already shouldering too much tax burden.
“I think what is clear and certainly my strongly held opinion, is that middle income earners are shouldering way too much of the risk ability of the tax burden in this country,” he said. “And so if there are any changes, they’re going to be assessed against that principle.”
Nationals MP Keith Pitt says the looming backflip was proof the Government “can’t be trusted.
“There was a time to oppose Stage 3. In the Parliament. When the legislation was being drafted. In the election campaign. In fact- any time before now” he told the Daily Telegraph.
“What this shows to the Australian people is that the Federal Labor Government can’t be trusted. From the Prime Minister down.”
“You just can’t believe a word they say.”
His colleague Barnaby Joyce says: “if you make a promise- you keep a promise.
“If I promise you $1,000 and later give you 600 bucks - I haven’t honoured my promise.
“It doesn’t matter what my reasons are.
“Australians work all of Monday and into Tuesday just for the Government. They want to start keeping the money they earn much earlier.
“That’s what the tax cuts do.”
However, NSW Premier Chris Minns backed in the changes if they provided greater returns for middle income earners, conceding the situation had changed compared to when the stage three cuts were legislated.
“I do think that if you look at a typical family in Western Sydney, about one-third of households are paying off a mortgage at the moment. Interest rate rises particularly smashed their budgets, and something needs to be done for them,” he told Sky News on Wednesday.
Mr Minns refused to say whether someone in Sydney earning $180,000 was a high income earner, instead saying those earning less were feeling the squeeze.
“The circumstances have changed in Australia since they were legislated. So I can understand why the Commonwealth government is looking at that,” he said.
He added people on $140,000 a year and paying a mortgage in Sydney were facing “massive pressure” with their incomes “currently going out the door backwards”.
“So clearly, something does need to be done for middle class families who are really paying a big price (with) interest rate rises and inflation which is hitting the family budget in a big way.”
Earlier, the PM defended his decision to break an election promise on the stage 3 tax cuts saying he is responding to the new “circumstances” that have arisen to create a cost of living crisis post-pandemic.
The PM was unapologetic as he all-but confirmed a change to the tax package, saying he would be taking “a proposal on economic policy” to the Labor party room on Wednesday.
“This proposal will be all about supporting middle Australia,” he said.
“We know there are cost-of-living pressures on middle Australia and we’re determined to follow the treasury advice to provide assistance to them.”
Mr Albanese said his “determination” and his “job” was to get the “best outcome for Australians”.
“It’s to respond to the circumstances which we confront,” he said.
“And we know that there’s been considerable coverage about the pressure that is on low- and middle-income earners particularly with regard to cost of living.
“The proposals on economic policy that we will take to the party room this afternoon and I will be speaking at the National Press Club.
“I’ll be giving a full exposition of economic policy and our response to provide assistance to middle Australia on cost of living at the National Press Club (on Thursday).”
Mr Albanese said Labor understood Australians were under pressure and would be providing support focused on Middle Australia.
“That’s the advice we have received from treasury,” he said.
As currently legislated, the Stage 3 cuts would have abolished the 37 per cent bracket for incomes between $120,000 and $180,000, and applied a 30 per cent tax rate to all earnings between $45,000 and $200,000.
It is understood Labor will instead keep the 37 per cent bracket for incomes between $135,000 and $190,000, with the 45 per cent rate to kick in from then.
Under the changes Australians earning up to $150,000 would be better off compared to the current structure of the stage 3 proposal, while those earning higher would be worse off.
The Coalition is poised to mount an intense political attack on Labor over the broken election promise, with the Prime Minister expected to launch a defence of the changes in a speech to the National Press Club on Thursday.
The changes would halve the tax cut going to Australians on $200,000 in order to deliver savings to low and middle income earners under Labor’s changes to the stage three package.
An Australian earning $200,000 a year will get a tax cut of $4,657 under Labor’s revamped stage three, compared to $9,075 that would have been delivered under the original plan.
A worker on $180,000 would get a tax break of $3,857, down from the $6,075 originally promised.
Meanwhile workers previously not due any tax break will get all benefit from Labor’s changes, with Australians on $40,000 to get $782.
Under the original stage 3 plan a person on $50,000 was only due a $125 tax cut, but will now receive $1,057.
Any changes would mark Labor’s second broken election promise impacting higher income earners after the government announced a tax hike on super funds above $3 million.
The total hit to the budget caused by the Stage 3 changes would be neutral, according to advice provided to government by Treasury.
All Labor MPs and Senators will meet in Canberra late on Wednesday afternoon, where Mr Albanese will seek feedback on a cost of living package signed off by cabinet overnight before unveiling the plan at the National Press Club on the eve of Australia Day.
The PM said on Tuesday the government was specifically looking at “how we can help low and middle income earners”.
“I support tax cuts and everyone will be getting a tax cut,” he said on KIIS radio.
Deputy Prime Minister Richard Marles repeated Labor’s line that its “position hasn’t changed” on Stage 3 but when pressured to respond to the possibility of future alterations he also highlighted a focus on “Middle Australia”.
“We understand the importance of tax cuts,” he said.
“But let me make this clear: we are completely focused on easing the cost of living pressures on Middle Australia.”
In a joint statement the Business Council of Australia, Minerals Council of Australia, Australian Industry Group and the Australian Chamber of Commerce and Industry called on Labor to stick to its commitment.
“Tinkering at the edges would mean a promise has been broken,” the peak groups said.
“Delivering the tax cuts in full would help demonstrate that governments can make and keep promises.”
The business leaders said there was a “compelling” case for the current legislated proposal.
“Our tax base is eroding and with an unhealthy reliance on taxing incomes as well as a raft of inefficient taxes, especially at state and territory level, we are increasingly ill-equipped to meet our society’s needs.”
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Originally published as Labor set to break Stage 3 promise to redirect tax cuts to low and middle income earners
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