Anthony Albanese is smashed with brutal questions about changing the Stage Three tax cuts – after he promised he wouldn’t because his ‘word is his bond’
Anthony Albanese has denied claims he has gone back on pre-election promises by scrapping planned cuts in the third phase, despite vowing that ‘my word is my promise’.
The Prime Minister faced a barrage of questions about the tax cuts in Canberra on Wednesday morning as he unveiled Kim Williams as the new ABC chairman.
It followed details emerging about his cabinet signing a major overhaul of tax cuts due to come into effect in July.
Low and middle income earners will be the winners from the government’s changes to statutory tax cuts, but high income earners will get less than expected.
The tax cuts were carried over from the previous coalition government, but the prime minister had repeatedly promised to maintain them as an election promise.
But under pressure over cost-of-living concerns, the government has now revised plans to roll back tax cuts for top earners.
On Wednesday, the Prime Minister was asked “what his word is worth now” if he were to go ahead with the tax cuts review, following his earlier promises to implement them unchanged.
But he shrugged off the criticism.
Anthony Albanese (pictured) has denied claims he has gone back on pre-election promises by scrapping planned cuts in the third phase, despite vowing that ‘my word is my bond’
Prime Minister Anthony Albanese (pictured right with partner Jodie Haydon) had previously said the phase three cuts would come into effect as laid down in law
“My determination and my job is to get the best result for Australians,” he said. “It’s a response to the circumstances we face.
“We know there is a lot of focus on the pressures placed on low- and middle-income earners, especially when it comes to the cost of living.”
He said the new tax plans would target low and middle earners at the expense of high earners.
“This proposal is all about supporting central Australia,” he said.
“We know there are cost-of-living pressures in central Australia, and we are committed to following the Treasury’s advice to provide them with relief.”
The new tax plans will hit the highest earners the hardest, with the maximum tax cuts reduced from more than $9,000 a year to around $6,000.
Under the original Phase Three package, the 32.5 percent marginal tax rate would be reduced to 30 percent and the 37 percent eliminated entirely, and the 45 percent tax rate threshold would be raised from $180,000 to $200,000.
Under the new plans, the 37 percent rate will no longer be eliminated, but will amount to $135,000, instead of $120,000 as is currently the case.
The top marginal tax rate of 45 percent will remain, but this rate is planned to be $190,000 instead of $200,000 as proposed in the phase three legislation.
“We understand that Australians are under pressure and we are providing support through the plan I am bringing to the party room this afternoon,” the Prime Minister added.
“(It) is focused, really focused on central Australia, and that’s the advice we’ve received from the Department of Finance.”
Mr Albanese said he would explain the new policy in more detail during a speech to the National Press Club on Thursday.
“I am a leader who speaks at the National Press Club and holds myself accountable,” he said.
“I will be giving a full presentation at the National Press Club tomorrow on the economic policy and our response to providing cost-of-living assistance to Central Australia.”
Under the new changes, all income earners will receive a tax cut, but the relief for higher earners will be less than under the Morrison-era tax package.
The opposition called the backflip “the mother of all broken promises.”
It is understood that the changes, which will come into effect from July 1, will have no impact on the budget outcomes.
In his only media appearance on Tuesday, Albanese said people were “hyperventilating” over the rumours, after previously promising the government would stick to the tax plan before the election.
“I support tax cuts and everyone gets a tax cut,” the Prime Minister told Kyle and Jackie O, the country’s highest-paid radio stars, on KIIS FM.
The changes are expected to be agreed by Labor MPs on Wednesday at the urgent cost-of-living talks Mr Albanese spoke about last Saturday.
Like the Greens, who have called for the tax cuts to be scrapped, the government is unlikely to face major obstacles in passing legislation to update the tax package through parliament.
But the coalition has gone on the attack over the government’s “broken promise” and said it would strongly oppose any changes to the tax package already legislated.
Speaking on Sky News, Shadow Treasurer Angus Taylor said that ‘abandoning every aspect of the tax cuts in phase three would be the mother of all broken promises.’
“The Treasurer and the Prime Minister have collectively committed to these tax reforms more than 100 times,” Taylor said.
“If they break this promise, there it is. But you know, it’s not too far for the Albanians to break promises.’
The changes will reportedly benefit workers earning between $18,200 and $135,000
Before Tuesday’s Cabinet meeting, David Pocock, a key Senate senator, said the tax cuts should be changed from their original form.
“This is a difficult task for the government, but I am really concerned that you go ahead with these (tax cuts) and then we will have to find other money to cover living costs,” Mr Pocock said.
“The phase three tax cuts in their current form are poorly designed and I believe they are the wrong policy for the current economic climate.”
On Tuesday, a coalition of business groups warned that any amendment would “undeniably damage the government’s credibility.”
In a joint statement, the Business Council of Australia, the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Minerals Council of Australia said “tinkering around the edges would mean a promise has been broken”.
The changes are expected to be rubber-stamped by Labor MPs on Wednesday at the urgent cost of living meeting, which Mr Albanese met last Saturday
In response to criticism that the tax cuts are unfair, the organizations said it was important to view the tax cuts as part of a package, and not in isolation.
“It is easy to forget that the first and second phases of the 2018 reform package focused primarily on lower- and middle-income taxpayers and that the entire package is much more balanced,” they said.
But the ACTU called on the government to scrap the tax cuts altogether, citing the benefits high earners received.
“The government must abandon the third tax cuts,” said ACTU secretary Sally McManus. ‘We need more help for people who are really under pressure on the cost of living, and these tax cuts will especially help those who need them least.’