Add Category
A Liberal backbencher says the world has changed since the former government legislated tax cuts for the nation's highest earners and they should be scrapped, as the Prime Minister holds firm to the commitment.
Key points:
- Prime Minister Anthony Albanese said the government had not changed its position on stage 3 tax cuts
- The cuts are legislated to come into effect in 2024 and mean everyone earning between $45,000 and $200,000 will pay 30 per cent tax
- Crossbenchers have added their voices to calls to delay or scrap the cuts given budgetary pressures
Prime Minister Anthony Albanese reaffirmed his party's promise to keep stage 3 tax cuts for high income earners, despite growing calls for them to be delayed or scrapped.
Speaking at the National Press Club in Canberra for the first time as Prime Minister, Mr Albanese urged voters to look at the history of the party's position on the tax cuts package.
The changes scrap the 37 per cent tax bracket for those earning above $120,000, making them the biggest winners from the cuts.
Liberal MP Russell Broadbent told the ABC's Afternoon Briefing the tax cuts no longer made sense.
"When things change, we should change. The world has turned on its head since the tax cuts were introduced," Mr Broadbent said.
"So people like me don't need tax cuts."
Labor committed to keeping the cuts at the election, which will cost the budget $243 billion over 10 years, during the election campaign.
The cuts have been legislated to come into effect on July 1, 2024 and mean everyone earning between $45,000 and $200,000 will pay 30 per cent in tax.
They also scrap the 37 per cent tax bracket for those earning over $120,000.
Mr Broadbent said Labor should "bite the bullet" and drop the cuts now.
Consensus after division
The third stage of tax cuts introduced to parliament by the former Coalition government in 2019 caused tension in the Labor party room.
Some in the party wanted a greater focus on lower-income earners, and others feared not backing it would leave the party open to a scare campaign.
Labor voted for the entire package after a failed attempt to scrap the third stage of cuts in what the Prime Minister labelled an "all or nothing" approach, but only after warning making predictions on the state of the economy in 2024 was risky.
"We said at the time it wasn't wise to consider that you knew in 2019 exactly what the economy would look like in 2024/25," he said.
"Parliament made a decision and we made a decision that we would stand by that legislation rather than relitigate it.
"We inherited it, and I said that we haven't changed our position because we're in a situation of all or nothing at the time.
"We voted for tax cuts because to vote against the package would have been voting against tax cuts including for people who desperately needed it at the time."
Treasurer Jim Chalmers was outspoken against the third stage of the cuts when in opposition.
"[Stage 3 is the] least affordable, least fair and least likely to be effective because higher-income earners aren't as likely to spend in the economy as workers of more modest means," he said as then shadow treasurer.
Crossbench calls grow for delay, scrapping
Several members of the crossbench have joined those previously in opposition to the tax cuts to argue going ahead with the current state of the budget would be unwise.
Independent ACT Senator David Pocock said the government would be better placed investing in unemployment services.
"Things have changed a lot since these were legislated," he said.
"I just don't think we can justify handing out to the wealthiest Australians.
"I get they don't want to be accused of breaking a promise, but there's a really good case for relooking at them."
Mr Albanese said Labor had not changed its position despite growing economic pressures.
"[It's an] issue of certainty and we said that. That's a reality of the fiscal position that we inherited," he said.
In an economic statement to parliament last month, Treasurer Jim Chalmers outlined the state of the economy, warning real wage growth is not expected until at least the end of next year.
Treasury revised down forecast economic growth, predicting inflation would peak at 7.75 per cent at the end of the year.
The Treasurer said inflation was not expected to return to the target band until 2024.
The unemployment rate was predicted to remain low for the latter half of this year before returning to 3.75 per cent by June 2023 and 4 per cent by June 2024.
The Treasurer also projected interest rates would continue to rise as the Reserve Bank worked to cap inflation.