Following years of mixed messaging, Labor has bowed to economic pressure and announced changes to its stage three tax cuts.<\/p>\n
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Only those earning less than $150,000 will benefit from the impending tax cuts, which were originally slated to abolish the 37 per cent tax bracket applied to income between $120,000 and $180,000 and reduce the 32.5 per cent tax rate to 30 per cent for all incomes between $45,000 and $200,000.<\/p>\n<\/div>\n
However, with rising inflation and consequent increases to interest rates, Labor has pivoted to make room for cost-of-living ease for middle Australia, effectively scrapping the already legislated stage three rollout \u2013 something Prime Minister Albanese said he would not do going into the last election.<\/p>\n
This means that those earning $200,000 or more will receive a $4,529 cut, instead of the legislated $9,075 they were due to receive from 1 July.<\/p>\n
Under the changes, the 19 per cent tax rate that applies to incomes between the $18,200 tax-free threshold and $45,000 will be lowered to 16 per cent.<\/p>\n
Those earning between $45,000 and $135,000 will be taxed at 30 per cent, while the 37 per cent tax rate will be reinstated and apply to incomes between $135,000 and $190,000, after which the 45 per cent rate will apply.<\/p>\n
This means that someone on $73,000 will receive a tax cut over $1,500, more than double the amount under the previous plan, while somebody on $100,000 will have their tax cut increased from $1,375 to $2,179.<\/p>\n
On Thursday before the National Press Club, Prime Minister Albanese said: \u201cOur government will deliver a tax cut for every Australian taxpayer\u201d.<\/p>\n
“This is a plan for middle Australia that delivers for every Australian taxpayer, right up and down the income ladder,\u201d he said.<\/p>\n
The tax cuts won't hurt inflation, he said.<\/p>\n
\u201cThis option is broadly revenue neutral and will not add to inflationary pressures,\u201d the PM cited a Treasury report and added that there are no implications for the Reserve Bank\u2019s forecasts.<\/p>\n
\u201cSome would say that we should stay the course, even if it means going to the wrong destination.<\/p>\n
\u201cTo them I say, we are choosing a better way forward given the changed circumstances.\u201d<\/p>\n
The PM also added that his government will increase the low-income threshold at which the Medicare levy applies.<\/p>\n
According to media reports, the government plans to launch an ad campaign to help sell its obvious backflip.<\/p>\n
\u2018Different position for best reason\u2019<\/strong><\/p>\n Doing the media rounds on Thursday morning, Treasurer Jim Chalmers defended Labor\u2019s surprise move, noting that the government has \u201ccome to a different position\u201d for \u201cthe best possible reason\u201d, which is \u201cwe can provide more tax relief for more people to help them with the cost\u2011of\u2011living\u201d.<\/p>\n \u201cNow we are being upfront with people and saying we have come to a different view. We've come to a different view because what we're proposing today is better for middle Australia, better for cost\u2011of\u2011living pressures, better for women and workforce participation and better for the economy, without adding to the inflationary pressures that we are dealing with,\u201d Mr Chalmers told ABC Radio.<\/p>\n Questioned about whether these broken promises could be costly for Labor, Mr Chalmers said \u201cwhat we're doing here is we're putting people before politics\u201d.<\/p>\n \u201cOf course, these will be politically contentious. Our opponents will play their usual mindless, nasty, negative politics over this.<\/p>\n \u201cWe understand that but I believe you build trust by making the right decisions for the right reasons in the interests of the people and when you come to a different view, as we have, you front up and explain why the circumstances have changed, why our position has changed and how people will benefit from what we are proposing today\u201d.<\/p>\n In the lead-up to last year\u2019s May budget, Treasurer Chalmers was, however, selling a different story, reinforcing at the time that the government would push ahead with stage three tax cuts.<\/p>\n This story would later shift to suggest that Labor was prepared to re-evaluate the tax cuts if inflation remained an issue.<\/p>\n \u00a0<\/p>\n Maja Garaca Djurdjevic Following years of mixed messaging, Labor has bowed to economic pressure and announced changes to its stage three tax cuts.<\/p>\n \u00a0<\/p>\n","protected":false},"author":1,"featured_media":1778,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1777"}],"collection":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/comments?post=1777"}],"version-history":[{"count":1,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1777\/revisions"}],"predecessor-version":[{"id":1779,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1777\/revisions\/1779"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media\/1778"}],"wp:attachment":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media?parent=1777"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/categories?post=1777"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/tags?post=1777"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n29 January 2024
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