Anthony Albanese will make a major speech to justify the unraveling of the legislated phase three tax cuts to help ‘Middle Australia’, arguing policy should focus on tackling the cost of living.
Despite guaranteeing dozens of times during the 2022 election, and in the 19 months since, that Labour’s position on the third stage of tax cuts had ‘not changed’, the Prime Minister has backed down and set himself up for a nail-biting political conflict.
The coalition – which passed the tax cuts in government in 2019 with Labor support – has already accused Mr Albanese of breaking a promise, saying they will restore the tax cuts to their original form if they win the next election .
Prime Minister Anthony Albanese will use a National Press Club speech on Thursday to justify his pushback on the third phase of tax cuts
But on Thursday at the National Press Club, Albanese will justify his decision to help low and middle income earners at the expense of wealthier Australians, selling it as a “tax cut for all” that will benefit all taxpayers.
“This is a plan for Central Australia that will deliver benefits to every Australian taxpayer, both up and down the income ladder,” he will say.
As he braces for further pressure over Labour’s decision, Mr Albanese will justify the major overhaul by saying: ‘If economic conditions change, changing your policies is the right thing to do. That’s what we do’.
Last year, Mr Albanese and Treasurer Jim Chalmers tasked senior officials at the Treasury and Treasury to explore options for cost-of-living relief for Australians.
In his speech, Albanese will cite this advice, explaining that the positive economic prospects of almost five years ago “have not materialized.”
Mr Albanese claims that cost of living pressures forced him to provide relief to lower and middle income earners
“This is the right decision, for the right reasons and we made it the right way,” he will say.
“It’s the best way forward because it’s the best way to help Australians struggling with their cost of living without putting pressure on inflation.”
Among the changes the Caucus implemented on Wednesday, the Albanian government’s tax cuts will reduce the tax rate on incomes up to $45,000 from 19 percent to 16 percent, and lower the tax bracket from $45,000 to $135,000 to 30 percent. of 32.5 percent.
In addition, the 37 percent tax bracket remains between $135,000 and $190,000, above which the top marginal tax rate then kicks in at a rate of 45 percent.
The changes will undo the third phase of the Morrison government’s tax package – designed to tackle the tax bracket – which would have abolished the 37 per cent tax band on incomes between $120,000 and $180,000.
Instead, a 30 percent tax rate would have applied to all income between $45,000 and $200,000, with a 45 percent tax rate on all income above this level.
As a result of Labour’s tax package, around a million taxpayers earning more than $150,000 a year will be up to $4,546 worse off than they would otherwise have been.
However, the vast majority of taxpayers will be better off, as all incomes between $45,000 and $135,000 will receive an additional $840 under the Albanian government’s policy.
Ahead of the announcement, shadow treasurer Angus Taylor said the opposition would “look closely” at Albanese’s speech, but said the parties’ position on the third tax cut was “unequivocal”.
‘The position that has changed is Labour’s. They, the Prime Minister and the Treasurer, have committed to the phase three tax more than 100 times. They have been locked up for years, they have been in legislation,” he said on Wednesday afternoon.
Business Council CEO Bran Black joined the opposition’s attacks on the backward policy change, arguing that public confidence in the government had been undermined when the changes were voted into law and an ironclad guarantee had been given, only to be subsequently amended.
“This decision to undo an ironclad guarantee significantly sets back our ability to implement the massive tax reform that is so urgently needed,” Mr Black said.