Crossbenchers urge Labor to scrap stage three tax cuts

At least nine of the 18 crossbenchers in federal parliament favour delaying or scrapping tax cuts which come into effect in 2024, over concerns they disproportionately benefit the wealthiest earners and will blow out the budget.

The Albanese government would have the numbers to axe the stage three tax cuts in the Senate. Three crossbench senators – David Pocock, Jacqui Lambie and Tammy Tyrrell – are against the tax cuts along with the Greens.

Member for Kooyong Monique Ryan is against the tax cuts.Credit: Alex Ellinghausen

Labor opposed the tax cuts heading into the 2019 election, but last year reversed its position under Anthony Albanese and vowed to keep them in place.

But it has been facing growing calls from economists, unions, the welfare sector and the Greens to revisit the tax cuts, which will cost the budget $243 billion over the next decade.

The Sun-Herald and The Sunday Age revealed last week that an analysis by the Parliamentary Budget Office shows men will get $160.6 billion of that money, while $82.9 billion will go to women.

The highest income bracket of over $180,000 will suck $117 billion out of the budget in tax cuts over the next decade, or 48 per cent of the total tax cut package. The $45,001 to $60,000 bracket will only get $2.7 billion, or 1 per cent of the tax cuts.

The Sun-Herald and The Sunday Age contacted all 18 crossbenchers in the House of Representatives and Senate to gauge their views on the final stage of then-treasurer Scott Morrison’s overhaul of the tax system, first unveiled in 2018.

Nine of the MPs and senators favour scrapping or delaying them, two are for keeping them, three are on the fence, and four did not respond to requests for comment.

Ten of the crossbenchers contacted also want a major probe into the taxation system modelled on the 2010 Henry tax review.

The stage three tax cuts would abolish the 37 per cent tax bracket, while the 32.5 per cent rate would be cut to 30 per cent for all incomes between $45,000 and $200,000.

Pocock said the tax cuts “should be reconsidered”.

“A lot has changed since they were legislated – bushfires, COVID, fires, floods, no real wage growth, the Russian invasion of Ukraine, sky-high energy prices, housing crisis,” he said.

“It’s clearly skewed towards the wealthy and skewed towards men... it doesn’t seem credible.”

Lambie, who voted for the tax cuts in 2019, said the money should now instead go to aged care, health and education.

“The stage three tax cuts have to go,” she said. “I voted for them three years ago, but made it clear we would need to have another look at them if things changed. It’s obvious that our economy isn’t in great shape since COVID.”

The member for Kooyong, Monique Ryan, said “anything that’s going to give $243 billion to top income earners over our society is inadvisable”.

“It won’t have trickle-down effect as some people have suggested – but what they will do is magnify preexisting income inequality,” she said.

Ryan said the issue of bracket creep – whereby inflation pushes Australians into higher tax brackets – should be addressed, but the stage three tax cuts should be aimed more at low and middle-income earners.

She said the government should revisit tackling concessions like negative gearing and franking credits, but any changes should be grandfathered in.

Fowler MP Dai Le said she did not support the tax cuts in their current form.

She said: “This is the time to be helping battlers on lower incomes, rather than the government putting more money into the pockets of those earning more than $200,000.”

”The proposed stage three cuts provide a windfall to the wealthy that would cost the budget $243 billion over 10 years.”

Queensland MP Bob Katter said he was inclined to back ACTU secretary Sally McManus “very strongly” in her position against the stage three tax cuts.

“She is one of the great leaders we have ever had in the union movement, and I’m not Robinson Crusoe in saying that,” Katter said. “Once you start playing around with taxation and thinking the aim of the game is who pays more taxation and who pays less, I’m on Sally McManus’s side.”

Indi MP Helen Haines said there was a “strong case for delaying or forgoing the stage three tax cuts in their current form”.

“Less than two per cent of people in Indi would benefit from the tax cuts yet, at the same time, the need for public investment in our region is growing,” she said.

“The economic argument for these tax cuts at the time they were put forward did not make sense, and is even harder to justify in the current economic situation.”

Mayo MP Rebekha Sharkie said the tax cuts were an “important part” of taxation reform – “however the timing of those cuts should be reconsidered”.

“The Reserve Bank is attempting to cool the economy through increased interest rates thereby reducing the amount of disposable income circulating in the economy,” she said. “Tax cuts for high-income earners appears to be at odds with what the Reserve Bank is trying to achieve.”

Clark MP Andrew Wilkie said he had always said the tax cuts were “unfair and unaffordable and must not be implemented”.

”What’s needed instead is a root and branch review of taxation in Australia, not unlike the 2010 Ken Henry tax review, except that this time around a review needs to lead to meaningful reform,” he said.

Warringah MP Zali Steggall said she was against the tax cuts when they were legislated but it would be “difficult to talk about” removing them now. She said she wanted a review of the tax system, and income tax and tackling generous superannuation concessions “should be on the table”.

Wentworth MP Allegra Spender said she supported the tax cuts at the election and it “seems very unlikely the government will walk back from their commitment”.

But she said she supports a wide review into the tax system and “income taxes should be considered as well all other taxes including stamp duty, company tax, payroll tax and GST”.

Goldstein MP Zoe Daniel said the tax cuts were legislated and “will not be a matter for the parliament unless the government chooses to revisit them”.

“At some point, the cost of $244 billion of the stage three tax cuts will collide with the desire of voters for more public resources to be deployed to other areas, for example, aged, child and health care, and the government will have difficult decisions to make,” she said.

A spokesperson for One Nation leader Pauline Hanson said she supported the tax cuts going ahead in their current form, especially given recent sharp rises in the cost of living.

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