The Albanian government is set to delay making a decision on tax cuts that would leave some workers with thousands of dollars more in their wages.
The 2024/25 phase three cuts were legislated by the previous coalition government.
The tax cuts would see the 37 per cent rate on those earning between $120k and $180k abolished. That bracket would be replaced with a 30 percent rate for anyone earning between $45k and $200k.
Prime Minister Anthony Albanese and Treasurer Jim Chalmers are under heavy pressure to ditch the cuts on advice the country can’t afford due to the need for big spending on defense and welfare projects.
The Australian Parliamentary Budget Office estimated the tax cuts would cost $243 billion over 10 years.
Australian Prime Minister Anthony Albanese (pictured right with his partner Jodie Haydon) is expected to further delay a decision on backing or scrapping already legislated tax cuts
Instead of going back on an election promise to support the cuts, however, the government is expected to use the October 25 budget to kick the can down the road – neither backing nor rejecting the legislation.
While this would give the government more time to convince the public of the need to adjust the policy, it will lead to accusations of lying from the opposition.
Liberal leader Peter Dutton is using Labour’s difficulties to fuel perceived tension between Mr Albanese and Mr Jim Chalmers over the issue.
“What we’ve seen … is a real split between the Prime Minister and the Treasurer, and the Treasurer has demonstrated his inexperience,” Mr Dutton said on Sunday.
‘(Mr Chalmers) has been out there purring a particular argument and the Prime Minister, I think sensibly, has given it up.’
Sir. Dutton said the debate is ‘not about (a) tax cut but whether you can trust Anthony Albanese and the Labor Party and they still have … the prospect or the ability to reverse the key promise they made last election’.
His attack came after Mr Chalmers said the government’s stance on the tax cuts had not changed but it needed to practice good economic management.
“No responsible government can ignore high and rising inflation, a worsening global situation or the fact that we have these ongoing structural pressures on the budget,” he said.
“My job as treasurer in this country is to make sure that the budget is on as sustainable a basis as it can be to deal with the challenges that we expect.
‘If there is to be a decisive feature in the budget that I hand in less than three weeks from now, it will be responsible financial management.’
As part of its rationale for delaying either supporting or dropping the tax changes, Labor has will warn of pressure to increase defense spending in increasingly turbulent strategic circumstances.
On Monday, Mr Chalmers and Defense Secretary Richard Marles are due to outline a $6.5 billion cost of 18 defense projects. Australian Financial Review reported.
They will also warn that promises made by the previous government to buy nuclear-powered submarines and recruit 20,000 defense personnel are unfunded.
Despite expectations that the planned tax cuts will eventually be either scrapped or limited, Mr Albanese denied that was the case.
“Our position has not changed – I have said that repeatedly,” he told reporters on Sunday.
‘These (tax cuts) must come in 2024, we will prepare a budget in October 2022.’
He said it would produce a sensible budget that would not increase inflationary pressures as central banks around the world raise interest rates.
“At that point, fiscal policy should be working in line with (monetary policy) not against it,” Mr Albanese said. ‘This is the context in which we make a budget.’
The 37 percent tax bracket is legislated to be abolished from July 1, 2024, and a new 30 percent tax bracket created for all individuals earning between $45,001 and $200,000. The picture shows two nurses
Sir. Dutton said the Prime Minister had left the door open to considering changes in the future.
“It looks like he’s still considering it between now and the next election,” he told the ABC’s Insiders programme.
Government ministers have consistently taken the line that there have been no changes in policy, but have not ruled out having discussions about changing the cuts.
‘It would be an unforgivable and a ridiculous mistake,’ said Mr Dutton.
Under statutory tax relief. those earning $18,201 to $45,000 would pay a marginal tax rate of 19 percent. The picture shows two female construction workers