‘Echoes’: Sign tax cuts could be ditched

The Albanese government is facing one of its first major tests as it contemplates breaking an election promise by amending the tax relief package amid mounting concerns over its $243bn cost.

The already-legislated cuts will from 2024 abolish the 37 per cent bracket so that anyone earning between $45,000 and $200,000 will pay only 30 cents of every dollar they earn in tax.

Labor supported the Morrison government to legislate a three-tier tax relief package in 2019 and then promised to keep the third stage in place before this year’s election.

But critics of the third tranche of tax cuts, including some within the Albanese government, say they are not equitable or affordable particularly given the current economic climate and pressures on the federal budget.

The Coalition has seized on the possible watering down of the cuts by drawing a comparison to former prime minster Julia Gillard’s promise not to introduce a “carbon tax”.

The Opposition Leader said Deputy Prime Minister Richard Marles “couldn’t give you a straight answer” on the stage 3 cuts.

“Which is exactly how Kevin Rudd and Julia Gillard behaved and we’re seeing echoes of that, which should be deeply disturbing,” Mr Dutton told Today.

Before she led Labor to a narrow victory with a hung parliament in the 2010 election, Ms Gillard declared: “There will be no carbon tax under the government I lead.”

She then said: “I don’t rule out the possibility of legislating a Carbon Pollution Reduction Scheme, a market-based mechanism. I rule out a carbon tax.”

The political damage had been done by the time the Gillard government announced the market-based carbon pricing scheme in February 2011.

Mr Dutton said on Friday that Anthony Albanese had given the Australian people a “solemn promise” not to change the stage 3 tax cuts.

“That is a big win for families who are struggling to pay their power prices, their gas bills, their fuel … they were relying on this Prime Minister,” he said.

“And now we’re looking at a complete betrayal of that trust.”

Mr Marles, who appeared on Today with Mr Dutton, said Labor had “made clear in relation to tax that our position has not changed”.

“We’re also making clear to the Australian people the sort of pressures that the budget is under and a lot of those have been building up over a period of time,” Mr Marles said.

“A lot of those have happened since the election, and a lot of it is to do with the circumstances that we were left by the former government.”

In the middle of a week dominated by debate over the cuts, Finance Minister Katy Gallagher hinted that the policy could be altered, saying “we haven’t changed our position yet”.

“We are finalising a budget where we are looking across the board at a whole range of decisions,” she told ABC Radio on Wednesday.

A survey by The Australia Institute released last week found almost twice as many Australians want the “stage 3” income tax cuts scrapped as those who want to keep them.

The progressive think tank’s poll found 41 per cent of people supported the Albanese government repealing the tax cuts compared with 22 per cent who were opposed.

Asked what they thought was better for the nation’s long-term interests, 60 per cent of the respondents chose “increased spending on government services like health and education” compared with 15 per cent who selected proceeding with the tax cuts.