Economic Policy

Tax flip? Cut it out

October 10, 2022

Clare Armstrong and Jade Gailberger

Herald Sun

Monday 10 October 2022

Tax cuts legislated for higher income earners remain untouched in the Albanese government's first budget.

It comes as Opposition Leader Peter Dutton warns that reversing tack on the promised cuts in the future would be an "unforgivable and ridiculous mistake".

Anthony Albanese said seven times his government's policy on the legislated stage 3 tax cuts "hasn't changed" when repeatedly probed about Labor's position during a visit to Western Australia on Sunday.

But the Prime Minister stopped short of offering a guarantee his government would not seek to change the tax package - which is not due to come into effect until July 2024 - in the future.

"We have a budget in a couple of weeks," he said. "Our position hasn't changed."

Mr Albanese said he was "not at all" conflicted by recent statements by Treasurer Jim Chalmers about the need to make "responsible" choices in the budget in the context of higher debt, inflation and climbing interest rates, even if those decisions were unpopular.

"We've seen the fastest, most consistent tightening of monetary policy across the global advanced economies by central banks in decades," Mr Albanese said.

"At that time, fiscal policy should work in concert with that, rather than against. That's the context in which we're framing a budget."

Mr Dutton said the issue was "not about a tax cut, but whether you can trust Anthony Albanese and the Labor Party".

"They've still got, it seems, in their back pocket the prospect or option to reverse the key promise they made at the last election," Mr Dutton said on the ABC on Sunday.

"It would be an unforgivable and ridiculous mistake."

Senior government sources have confirmed there is "no way" the stage 3 cuts, which are currently forecast to cost the budget bottom line $243bn over the next decade, will be completely ditched.

It is understood everyone promised a cut by the Albanese government at the 2022 election will receive one.

However, the government is debating internally the size of the saving it is prepared to deliver to higher income earners.

A new poll has revealed almost three in five voters in the wealthy inner city seat of Kooyong support the stage 3 income tax cuts. And the contentious policy also has strong backing from voters in the aspirational seat of McEwen in Melbourne's north.

The poll comes after analysis showed abolishing the legislated cuts would overwhelmingly affect voters in Labor, Teal and Greens seats.

Victorian Liberal senator James Paterson - who commissioned the Tele Town Hall poll - said an overwhelming majority in Kooyong and McEwen had made clear they supported everyone earning $45,000 to $200,000 paying straight 30 per cent rate in income tax.

"Anthony Albanese needs to be a man of his word and honour his promise to keep legislated tax cuts intact," Senator Paterson said.

In Kooyong, which the Liberals lost at the election to independent Monique Ryan, 58 percent of the 1202 survey respondents last week backed the cuts.

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