Labor is sticking to its Stage 3 tax cut plans as business support measures weigh on the budget
The Albanese government says it has no plans to repeal a set of income tax cuts projected to cost $243 billion over 10 years.
The Albanese government says it has no plans to repeal a set of income tax cuts projected to carve $243 billion from the nation’s coffers over the next decade, even as it balances its costly business priorities against a tumultuous economic outlook.
Debate over the ‘Stage 3’ tax cuts surged to the fore on Monday, after Prime Minister Anthony Albanese defended Labor’s decision not to meddle with tax cuts originally put forward by the Morrison government.
The plan, which passed into law in 2019 with Labor’s support, will remove the bracket taxing 37 cents of each dollar of earnings between $120,001 and $180,000.
The $180,000 top bracket limit will expand to $200,000.
The changes will also impact the $45,001-$120,000 bracket, taxing 30 cents of every dollar instead of 32.5 cents.
In effect, this means those earning between $45,000 and $200,000 will face the same 30 cent-per-dollar tax rate on that income.
Those changes are set to come into effect from 2024.
The Stage 3 cuts have long faced scrutiny from social service advocates, who say higher-earning Australians will overwhelmingly benefit from the reshuffled tax brackets.
Parliamentary Budget Office data, reported by Guardian Australia, found the top 1% of Australian income earners could expect to save $1.4 billion in tax payments for 2024-2025 — more than the bottom 65% of income earners combined.
Those earning $50,000 a year could expect to save $2.40 in tax a week under the Stage 3 cuts, but those earning $200,000 per annum would save around $174 a week.
When asked if Labor would now reverse course on the tax cuts, given the shaky economic environment his government has inherited, Albanese yesterday said the party will “stand by the comments” it made in support of the overarching legislation.
“We made the decision that we would stand by that legislation rather than re-litigate it and we haven’t changed our opinion,” he added.
The decision not to change stance on the Stage 3 tax cuts comes as the Labor government faces higher-than-expected expenses and an uncertain economic forecast, which could impact tax receipts in the years to come.
Last month, Assistant Treasurer Stephen Jones said the nation’s business registry revamp will actually cost $1 billion more than projected by the Coalition.
And the Treasury yesterday revealed draft legislation surrounding the $1.55 billion Technology Boost and Skills and Training Boost programs, signaling the government will indeed finance a costly measure supporting small business.
Debate over the Stage 3 tax cuts has even shaded the impending Jobs and Skills Summit, one of Labor’s hallmark policy objectives.
Appearing on ABC News Breakfast Tuesday morning, Minister for Families and Social Services of Australia Amanda Rishworth defended Labor’s position, despite the likelihood Stage 3 tax cuts will overwhelmingly benefit high-earning men.
“Look, let’s be really clear about the stage three tax cuts,” she said.
“They’re already legislated and they don’t actually come into play until July 1, 2024. That’s two years away.
“So, our focus is on the here and now. We’re bringing people together through the Jobs and Skills Summit. We’re getting on with delivering what we promised in the election, in a whole range of areas.”
As Labor sticks by the cuts, political opponents have urged the government to rethink its plan.
Taking to social media on Monday morning, Greens Leader Adam Bandt called for the government to tear up its support for the Stage 3 cuts, and instead channel its tax receipts into social services.
“These tax cuts will turbocharge economic & gender inequality – stripping $244 billion from the budget that should go into public services,” he said.
“They must be scrapped.”
