Federal Treasurer Josh Frydenberg said the Labor Party “cannot be trusted” to leave the legislated stage 3 tax cuts untouched should they win at the next federal election.
“Even if Labor begrudgingly gives a commitment to back our stage 3 tax cuts, they cannot be trusted to deliver them,” Mr Frydenberg said. “When it comes to tax, Australians have learnt the hard way: don’t look at what Labor says, look at what Labor does.
“Labor has opposed our legislated income tax cuts every step of the way and took $387 billion of higher taxes to the last election.”
Mr Frydenberg’s comments follow reports of Labor Party support for the stage 3 income tax cuts, which are legislated to take effect on 1 July 2024, at an estimated cost of $137 billion between 2024 and 2030, and apply a standard 30 per cent income tax rate to those who earn between $45,000 and $200,000 a year.
According to the Australian Financial Review, the federal Labor Party will approach the next election with a commitment to leaving the stage 3 tax cuts untouched if it forms government in a bid to dispel perceptions of the party as being for higher taxes.
Senior members of the party are reported to have “pledged” to leave the taxes alone, though the promise has yet to be ratified by the caucus. Speaking to reporters on Tuesday, Opposition Leader Anthony Albanese said the party will make a decision “at an appropriate” moment.
“We’ll make a decision at an appropriate time,” Mr Albanese said. “But I’ll say this: Australians will always be better off under Labor.
“We have a Prime Minister who last week suggested that Australians didn’t need economic support who were being locked down because they had a buffer. This government doesn’t get it when it comes to the budgets of Australians.”
The Labor Party has shown sustained signs of caution over the cuts, with the latest as recent as May. Days after his budget reply speech, shadow treasurer Jim Chalmers signalled the party would look to curtail the tax cuts off the back of the government’s big spending budget, which will leave the economy with close to a trillion dollars’ worth of debt.
Dr Chalmers took to Sky News during budget week to say his party would take its time to consider the implications the cuts would have on low and middle-income earners before supporting it.
“The government built these tax cuts into the budget more than three years down the track now, they’ve racked up a trillion dollars [in debt],” Dr Chalmers told Sky News. “We have to weigh all of that up.”
It was the party’s position then to consider capping the stage 3 cuts at $180,000 in a bid to save the government $80 billion, after long opposing the cuts.
“We do think that middle Australia deserves tax relief,” Dr Chalmers said. “We said at the time, and we’ve said ever since, that it didn’t make a lot of sense for the government to commit tens of billions of dollars to the highest-income earners some years down the track.
“Our view has been vindicated by the fact that the government, since making that announcement, has racked up that trillion dollars in debt.”
Labor last aired opposition to stage 3 cuts in October last year when stage 2 cuts were introduced early and backdated to 1 July 2020.
The stage 2 cuts, which were initially scheduled to take effect from 1 July 2022, saw the top threshold of the 19 per cent income tax bracket increased from $41,000 to $45,000, and the top threshold for the 32.5 per cent tax bracket raised from $90,000 to $120,000.
John Buckley is a journalist at Accountants Daily.
Before joining the team in 2021, John worked at The Sydney Morning Herald. His reporting has featured in a range of outlets including The Washington Post, The Age, and The Saturday Paper.