Coalition MPs press Peter Dutton for personal income tax cuts

Coalition MPs are pushing the Opposition Leader to promise generous income tax cuts at the next election, with some arguing for an adoption of the original Morrison government stage three reform.

Liberal MP Garth Hamilton, the Coalition’s highest ranking member of the House economics committee, is among opposition MPs pressing for income tax reform. Picture: Martin Ollman/NewsWire

Coalition MPs are pressing Peter Dutton to promise generous income tax cuts at the next election, with some arguing for an adoption of the original Morrison government stage three reforms or taking a similar package to taxpayers

While Liberal and Nationals MPs acknowledge the economy had changed significantly since the Morrison government unveiled the stage three tax cuts in 2018, there was a push for the ­Opposition Leader to do as much as he could to offer additional tax ­relief.

“We’ve got to make the right decision for the times,” said Liberal MP Garth Hamilton, the opposition’s highest ranking member of the house’s economics committee.

“I still think the intent of that (the Morrison stage three) to level out taxation, to remove bracket creep, to incentivise pay growth, I think those are all worthy things to look at and should continue to be in our considerations.”

Another Liberal MP said they’d like to revisit the original stage three tax cuts but conceded the Coalition would have to find a lot of revenue to pay for them and a lot in savings to offset the cost.

“I don’t know if we go back to Morrison stage three but I’d like to see a simpler tax system, broader tax brackets, people not pushed into as high a tax bracket off relatively low incomes and lower taxes preferably, but obviously there are huge pressures on the budget,” the MP said.

One Liberal MP said the ­Coalition should wait until the economy improved before looking at tax cuts for higher income ­earners.

Stymieing the Coalition’s ability to offer more lucrative tax cuts is its declaration it will not cut “essential services”, potentially precluding it from trimming much of Labor’s record government spending fuelled by increased outlays for social benefits and transfer payments.

At the same time, the ­Coalition’s taxpayer-funded tilt towards nuclear energy – expected to sap hundreds of billions from Treasury coffers – is also set to crimp its tax cut offering.

On Sunday, opposition finance spokeswoman Jane Hume said the Age Pension, childcare and other “social safety nets” would not be curbed under a future Coalition government.

Instead, the opposition would target “undisciplined and unnecessary” spending, Senator Hume said, which had formed some of the $315bn in additional outlays since the Albanese government came to office in May 2022.

The comments sparked a backlash from Jim Chalmers, who accused the Coalition of harbouring plans to scrap cost-of-living aids contained within the $315bn spend.

“If they wouldn’t have committed to pension indexation, what else is at risk?” the Treasurer said.

The Australian has previously reported it was unlikely the ­Coalition would go to the election promising to revive the flat marginal rate of 30 per cent for every dollar earned between $45,000 and $200,000, given the cost of coupling that plan with greater ­relief for low-income earners under Labor’s package, which came into effect on July 1.

According to Treasury modelling, retaining Labor’s 16 per cent tax rate on income earned between $18,201 and $45,000, while restoring the Morrison tax package for incomes earned at $45,001 and above would cost the budget an additional $38.9bn over the four-year forward estimates ­period on top of there existing $105.7bn price tag.

Coalition MPs were quietly confident their economic narrative was sitting well with voters, though they agreed they needed to announce more policies as the election drew closer – particularly a plan to get on top of inflation.

On Sunday, Senator Hume also said the Coalition had no plans to reform the Reserve Bank if it won the election, despite its previous enthusiasm for the ­recommendations of a sweeping review into the institution.

She said the RBA reforms were “no longer something that needs to be talked about”, and the ­Coalition was content with sticking with the current single-board arrangement.

“You need that continuity and stability of the current board, that’s the job that these people were hired to do. They were hired to do monetary policy and they should continue to do monetary policy,” Senator Hume said.