This was published 2 years ago
Government will honour its tax cut pledge: Treasurer
By Shane Wright and Rachel Clun
Treasurer Jim Chalmers has sought to quash any suggestion the government will abandon the $243 billion stage three personal income tax cuts, saying it would honour its promise to voters to stick with the package.
Despite questions in some parts of the Labor Party and calls from a member of the Coalition to ditch the cuts, Chalmers on Tuesday said there was no reason for the government to change its commitment made ahead of this year’s election.
Treasurer Jim Chalmers says the government will honour its promise to keep the stage three tax cuts.Credit: Alex Ellinghausen
“We took a commitment to the election, we haven’t changed that commitment. And the important thing I think for everybody to understand is that these tax cuts don’t come in for another couple of years,” he said on ABC Radio on Tuesday.
“The government’s focus is on some of our nearer-term challenges. So things in the jobs market, in particular, whether it’s stagnant wages, whether it’s labour and skills shortages, job security, these sorts of issues in our economy – inflation, cost-of-living – they’re our focus right now.
“We’ve seen no reason to change the commitment we took to the election.”
Under the package, the 37 per cent tax bracket will be abolished, the top 45 per cent bracket will start from $200,000 and the 32.5 per cent rate will be cut to 30 per cent for all incomes between $45,000 and $200,000.
The cuts were part of a seven-year package announced by the Coalition in 2018. Following its 2019 election defeat, Labor said it would honour the package which will start from mid-2024.
Analysis by the Parliamentary Budget Office for the Australian Greens shows the top fifth of the population would gain $188 billion, or 77 per cent, of the $243.5 billion benefit from the tax cuts over their first nine years of operation.
Chalmers said the budget was “heaving with debt” but the government had to focus on immediate pressures such as inflation and falling real wages.
“What we’ve got to do is, we’ve got to focus on what we can influence right now,” he said.
Former Nationals leader Michael McCormack said the government should not “crab-walk” away from the tax cuts that would deliver higher incomes to millions of Australians.
Nationals MP Michael McCormack says the stage three tax cuts will deliver a wage increase to millions of Australians.Credit: Alex Ellinghausen
“Labor talks about increasing the wages of people. Giving people a tax cut increases their incomes and it helps to deal with cost of living pressures,” he said.
“Some things have changed, but not that hard-working Australians shouldn’t get back more of their hard-earned income.”
Opposition Leader Peter Dutton said Prime Minister Anthony Albanese needed to stick to his promise to keep the legislated changes.
“The prime minister promised the Australian public before the election that he wouldn’t trash the stage three tax cuts – which would see 95 per cent of Australians paying 30 cents in the dollar or less,” he said.
“If he’s now trying to walk away from the tax cuts that were promised, that people voted for Labor on, then that is a significant break of trust and of faith with the Australian people.”
One Labor MP, who spoke on condition of anonymity, said there would have to be a shift in the public’s attitude towards the tax cuts and a large shift in the circumstances of the budget to justify breaking the party’s promise to honour the package.
They said there had been some shift in the community about the tax cuts while there were clear questions over their impact on the budget bottom line.
But they also stressed keeping faith with voters, who knew Labor had supported the tax package ahead of the election, would also be a key issue if the debate continued.
Labor backbencher Mike Freelander said he was a little uneasy about tax cuts for wealthier people.
But Liberal senator Andrew Bragg said there was no reason to scrap the legislated tax cuts.
“Addressing bracket creep is important, which is why the stage three cuts must stay,” he said.
Bragg said he will always favour cutting taxes if it will promote investment, and the government should keep the stage three cuts but also look at company tax.
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