Powered by MOMENTUM MEDIA
investor daily logo

Is Labor backtracking on stage 3 tax cuts?

  •  
  •  
4 minute read

Labor is prepared to re-evaluate stage three tax cuts if inflation remains an issue.  

Assistant treasurer, Stephen Jones, has cited “differences in opinion” within the Labor government regarding the legislated stage three tax cuts.

Just days before the government’s expenditure review committee meets to assess the viability of stage three tax cuts, Mr Jones told SkyNews that differences of opinion do exist in the party but that they’re to be expected, especially concerning “difficult and challenging economic policy questions”.

“One of the good things about the Labor party is there’s lots of really bright people with strong thoughts and opinions,” Mr Jones said.

==
==

He assured that while the government remains committed to supporting the package, it is “trying to frame a budget in a very difficult set of circumstances”.

“There is a very rocky international environment,” Mr Jones said.

“Everywhere we look is trouble, it’s difficult but that’s the job we’ve been given”.

In a separate interview with ABC Drive, Mr Jones conceded that “if we’re still fighting inflation the way we are today”, “we might have a different conversation” ahead of the intended start date of the stage three tax cuts.

Stage three tax cuts, due to kick in on 1 July 2024, are set to abolish the 37 per cent tax bracket applied to income between $120,000 and $180,000, and reduce the 32.5 per cent tax rate to 30 per cent for all incomes between $45,000 and $200,000.

Treasurer Jim Chalmers echoed Mr Jones’ message, telling media this week that Labor intends to stick to its election promise. But some of his words, especially his acknowledgment of the dire situation in the United Kingdom, have been perceived to hint at possible tweaks in the policy.

Namely, Mr Chalmers said Australia was concerned with the predicament unfolding in the UK where markets crashed in response to the government’s mini budget which included cutting taxes for the country’s top earners, a policy the Truss government has since been forced to scrap.

“What we've seen play out in the United Kingdom is not irrelevant to us. It's not irrelevant to us because it's a cautionary tale about what can happen if you get your policy settings out of whack in a way that doesn't suit the economic conditions, and particularly the global economic conditions. And so we're very attentive to what's happening in the United Kingdom,” the Treasurer said.

The opposition has been quick to slam the parallels made by the Treasurer, with shadow treasurer Angus Taylor telling ABC News Breakfast that the Treasurer’s spiel regarding the UK was “very inappropriate”.

“This is a very big tax bracket that’s covered by these tax cuts. It’s not the top tax bracket, it’s very different from the UK. We haven’t seen anything like the reaction from the markets that we saw in the UK. So, I think drawing that analogy, which I know some in Labor are doing, I think is very inappropriate,” Mr Taylor said.

Opposition leader, Peter Dutton, echoed his colleague’s sentiments, accusing the Labor government of “walking away” from its support of the tax cuts.

“They will have all the hype around cutting programs but they are obviously walking away from the stage three tax cuts,” Mr Dutton told Sky News.

“That would be a significant break of faith with the Australian public because there were many people who voted for them on the basis that they weren’t going to increase taxes and now we hear they are.”

Jim Chalmers has previously referred to the stage three tax cuts policy as the “least affordable, least fair and least likely to be effective”, but he appeared to have a change of heart ahead of the federal election and publicly confirmed his support for the policy mid last year.

Is Labor backtracking on stage 3 tax cuts?

Labor is prepared to re-evaluate stage three tax cuts if inflation remains an issue.  

investordaily image
investordaily image
ID logo
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.

Comments powered by CComment