Anthony Albanese has reassured that “everyone will be getting a tax cut” in a bid to hose down speculation that stage-three tax cuts will be trimmed to pay for cost of living relief for low and middle-income earners.
Although Labor has not ruled out modifying stage three to make the package less generous at the top end, senior ministers suggested on Tuesday the government will look to do more for middle Australia while acknowledging the “importance” of tax cuts, as the deputy prime minister, Richard Marles, put it.
On Monday 2GB Radio reported that the government was considering lifting the tax-free threshold while retaining the highest tax bracket at $180,000 instead of lifting it to $200,000 – an option the government has rejected.
With some Labor MPs expressing concern about the political wisdom of abandoning the election commitment to stage-three tax cuts, the Coalition is already accusing Labor of breaking a promise.
On Tuesday, Albanese appeared to confirm that middle-income earners would be given more cost of living relief, hinting that it might not come at the expense of the top end.
“I support tax cuts and everyone will be getting a tax cut,” Albanese told KIIS FM Radio.
“You will always be looked after, Kyle, because I know that you’re struggling,” he said to host Kyle Sandilands, who reportedly earned more than $5m a year in 2022 and has inked a new $200m 10-year deal with co-host Jackie O.
“Look, what we need to do across the board – what we’re doing is looking at how we can help low and middle-income earners. Middle Australia particularly is doing it really tough ... people who have a mortgage. So we’re looking at ways in which we can provide assistance to them.
“We did that last year with a range of measures. People are benefiting from cheaper medicines, cheap childcare, the energy price relief plan, but we’re looking at other ways as well, are there other ways that we can provide support for people?”
The tax cuts, passed by the Morrison government in mid-2019 with Labor support after it failed to split the bill, begin in July 2024.
They remove the $120,000 to $180,000 tax bracket, increase the top tax bracket to $200,000 and reduce the marginal rate of tax for everyone earning between $45,000 and $200,000 to 30%.
Marles told reporters in Canberra that “our position hasn’t changed” when confronted with the possibility Labor could be about to break a promise to keep stage three.
“In all that we do, in every decision that we take, we are utterly concerned about easing, the cost of living pressures on middle Australia and every decision we continue to take that will happen,” Marles said.
“We understand the importance of tax cuts. We’ve said that all along.
“But let me make this clear: we are completely focused on easing the cost of living pressures on middle Australia.
“We’ve been doing that since the moment that we have been elected and we’ve seen that through a number of initiatives be it cheaper medicine, be it downward pressure on power prices.
“The inflationary environment around the globe has persisted. And that is putting pressure on middle Australia. We will be entirely focused in all the decisions we take on easing that.”
Despite Coalition opposition to any changes to stage three, the Greens and key crossbenchers Jacqui Lambie and David Pocock have offered Labor support to make changes.
Pocock told Radio National the stage-three tax cuts “should be redesigned” because “there is a way to make these fairer”. He noted Parliamentary Budget Office analysis for the Greens that the cuts will cost $323bn over 10 years.
“I think people want governments to have integrity, but they also want them to respond to the challenges in front of them,” Pocock said.
“This is an opportunity to change the policy to be fit for the current economic environment.”
