The Albanese government was warned not to “stab hard working Australians in the back” by breaking its promise to support the already legislated third phase of tax cuts.
The Labour government has repeatedly promised that the third phase of the previous government’s tax cuts would take effect on July 1, with Prime Minister Anthony Albanese repeating that commitment last week.
However, Australian media is reporting this week that the government is considering changing the tax cut package. The Cabinet is expected to discuss the issue over the week.
The current law, passed in 2019 by the coalition government, will see the marginal tax rate of 37 per cent abolished and the marginal tax rate of 32.5 per cent reduced to 30 per cent. The maximum marginal tax rate threshold of 45 per cent is also set to increase from $180,000 to $200,000.
The Australian Taxpayers’ Alliance (ATA) says 2GB’s Chris O’Keefe’s announcement to reject the changes will send a clear message to voters that the government is not trustworthy. ATA executive director Brian Marlow stated:
“If the reports are true, then this is a clear signal to millions of Australian voters that Labor cannot be trusted. They promised over and over again not to touch stage 3 tax cuts, yet here we are just moments away from parliament resuming and massive tax changes appear to be on the cards.”
Marlow argues that a change in the government’s plans could “stab hard working Australian voters in the back at the last minute.” He also cited modelling by ATA chief economist Dr John Humphreys that indicated the government would gain “no extra revenue” by abandoning the third stage of the reforms.
Raising the top threshold from $180k to $200k is expected to boost reported GDP by $3.3 billion/year. That’s obviously a good thing – especially in the current stagnant economy – and if Labour backtracks on that policy then Australia will lose that benefit.
The ATA also noted that even at $200,000, the maximum marginal tax rate in Australia would be much lower than in many comparable countries, starting at AUD $270,000 in Canada, AUD $240,000 in the United Kingdom, and AUD $880,000 in the United States.
Political editor Andrew Clennell also claimed on Tuesday that the Albanese government is going to raise the $180,000 income tax threshold.
“It appears as if those on so called lower middle incomes will get an extra tax cut. There will be a tax cut for those on higher incomes. Whether or not it is the same this proposal is the stage three tax cuts remains to be seen.”
