Influential crossbench parliamentarians have called on Labor to toughen up the petroleum resource rent tax and redistribute stage-three tax cuts to raise revenue to alleviate the cost of living.
The independent senator David Pocock and MPs Monique Ryan and Dai Le have called for more “courage” on tax reform, with all three supporting revamping the stage-three tax cuts aimed at middle and high income earners.
In comments to the Australia Institute’s revenue summit on Friday, Le urged Labor to “really consider their roots” in providing more cost-of-living relief, such as reducing the petrol excise, while Ryan presented a plan to double rent assistance with savings from retaining the 37c tax bracket.
The stage-three tax cuts, passed by the Morrison government in mid-2019, 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%.
The Albanese government has insisted there is no change to Labor’s plan to leave the stage-three tax cuts in place, arguing they help return bracket creep, which occurs when income earners face higher rates of tax as they move into higher tax brackets.
At the revenue summit, Ryan said that retaining the 37c tax rate which applies to income above $120,000 would provide $8bn of additional revenue. This could fund a $3bn capital grant program to build 10,000 social houses a year and $5bn to double commonwealth rental assistance, she said.
“This will support the most vulnerable people in our community though the toughest cost-of-living crisis in decades,” Ryan said.
Le, the member for Fowler, said the government “really can’t go ahead with” and “shouldn’t go ahead with” the stage-three tax cuts.
Le cited the average income of $1,200 a week of her constituents in south-west Sydney, an income level of $62,400 a year that would see most worse off under stage three after the removal of the low and middle income tax offset.
“Labor is supposed to be for the working Australians,” she said. “So I call on the Labor government to really consider their roots and how they can provide some relief now for working Australians.”
Pocock reiterated his calls to raise more revenue from the petroleum resource rent tax. In August, Pocock ruled out supporting Labor’s “weak” changes which would collect $2.4bn more over the next four years but has been criticised for bringing forward rather than increasing revenues.
On Friday Pocock said “we have to start getting a return for our resources”.
“We’ve largely missed out on the fossil fuel export boom – it’s not too late to put some good measures in place to get a return from that.”
Pocock also backed calls from teal independent MPs to introduce national road-user charging after the high court struck down Victoria’s electric vehicle tax.
Pocock said Australia needed a “uniform road-user charge” that considered the weight of vehicles because “that is what damages roads” while also incentivising drivers to choose smaller more efficient vehicles.
Pocock called for “a really low level road-user charge, and use all of that revenue … to put it into charging stations and infrastructure which we desperately need”.
“I think most EV drivers will probably be OK with that, if they were paying a couple of cents a kilometre … but it meant there were more chargers.”
Pocock called on Labor to reconsider negative gearing and capital gains tax discounts, two policies it abandoned after its 2019 election defeat.
After the Liberal senator Maria Kovacic suggested in September that the government could consider capping the number of houses investors could negatively gear, Pocock said there “would be a lot more people in the Coalition concerned about housing”.
“But there’s people like Senator Kovacic that are courageous enough to say it out loud.”
The intervention from the crossbench comes as the Organisation for Economic Co-operation and Development called on Australia to consider broadening the goods and services tax and potentially lifting the rate, to help rebalance the tax system so retirees take on more of a share alongside workers.
Australia gets 26.5% of its total tax take from GST, compared to the 32% OECD average, although upping the rate comes with its challenges as all states and territories need to unanimously agree to change it.
In its economic survey report for Australia, the OECD also urged the federal government to revisit tax concessions on superannuation.
The treasurer, Jim Chalmers, said the OECD report lined up well with Labor’s economic plan.
“The Albanese government’s economic plan aligns with the OECD’s agenda, including getting our budget into better nick, investing in our people and their skills, improving women’s economic participation, broadening and deepening our industrial base, and embracing the opportunities of the net zero transformation,” he said.
