Labor Government to Backtrack on Tax Cuts for High Income Earners: Reports

An Australian 100 dollar note is shown on Oct. 6, 2009. (Greg Wood/AFP via Getty Images)

The Albanese government will likely change the federal tax rate for Australians at a Labor caucus meeting on Jan. 24.

The Labor Party move will see it likely backtrack on an election promise to deliver stage three tax cuts for high-income earners.

Instead, the government will consider retaining the 37 percent tax bracket for high-income earners, and providing tax relief to low and middle-income earners with a cost-of-living relief package.

The opposition however, is claiming the government is breaking an election promise to keep the original tax plan legislated under the Coalition government.

The Morrison federal government legislated to abolish the 37 percent tax rate for income between $120,000 and $180,000 from July 1, 2024. All taxpayers earning between $45,000 and $200,000 would then be taxed at 30 percent under the changes.

However, the Australian Financial Review reported that a Labor cabinet meeting on Jan. 23 will see the government break this stage three tax cut promise.

Related Stories

Victorians to Bear Australia' Heaviest Property Taxes

7/10/2023

Chinese Ambassador Tries to Give Australia a Tax Lesson

5/31/2023

According to reports, the 37 percent tax rate will be retained but the threshold could be raised from $120,000 to $135,000. A 45 percent tax rate would apply to those earning more than $190,000, the publication reported.

A high-income earner who would have received a $9,075 tax cut will now receive just $4,300, under the reported changes.

The “savings” will then be passed on down the income chain to middle and low-income earners.

Mr. Albanese confirmed at a press conference on Jan. 24 that he will be “taking a proposal on economic policy” to the Labor Party room in the afternoon.

“This proposal will be all about supporting middle Australia. We know there are cost of living pressures on middle Australia and we’re determined to follow the Treasury advice to provide assistance to them,” Mr. Albanese said.

“We understand that Australians are under pressure. And we’re providing support through the plan that I'll take to the Party room this afternoon, is focused, really concentrating, on middle Australia and that’s the advice we have received from Treasury.”

Broken Promise: Opposition

Deputy Leader of the Liberal Party Sussan Ley said the Coalition wants to see “everyone’s income increase” and “everyone to pay less tax.”

“Since the tax bracket was introduced, we’ve seen twice the number of people in that bracket, we’ve seen bracket creep. This shouldn’t be about lower-income versus higher income, it shouldn’t be about the class war,” Ms. Ley said on Sky News.

“Of course, we support the legislation that we were party to, and that Labor agreed to. And there’s no way in the world we’re going to back in higher taxes and an attack on aspirational Australians and a Prime Minister that’s lied to Australians, no way in the world.”

In a post to X, Ms. Ley accused Labor of breaking an election promise to the Australian people.

“A reminder that before the election Labor promised Australians: they'll get the same legislated tax cut under us as under them,” Ms. Ley said.

On Jan. 23, Mr. Albanese told KIIS FM, “I support tax cuts and everyone will be getting a tax cut.”

The Epoch Times has contacted the treasurer’s office for comment on the proposed tax changes.

Shadow Treasurer Angus Taylor described the reported backflip as “the mother of all broken promises.”

“Here’s a prime minister and treasurer who committed more than 100 times between them to stick with these stage three tax cuts … and it is clear now that he’s going to break that promise,” he told Sky News. 

“This prime minister and treasurer both voted for these tax cuts.”

In a joint press release with Treasurer Jim Chalmers in July 2021, the Labor government promised to retain the Morrison government tax cuts.

“An Albanese Labor government will deliver the same legislated tax relief to more than 9 million Australians as the Morrison government,” the release on July. 26 said.

“The Shadow Cabinet and Caucus have today confirmed that Labor in government will uphold the legislated changes to personal income taxes and maintain the existing regimes for negative gearing and capital gains tax.

“Labor is providing certainty and clarity to Australian working families after a difficult two years for our country and the world.”

Asked before the election if stage three is absolutely locked in, Mr. Albanese said, “yes.”

Prime Minister Anthony Albanese speaks during a media conference at the Gold Coast Emergency Management Centre in Gold Coast, Australia, on Jan. 9, 2024. (Chris Hyde/Getty Images)

Determined To ‘Get the Best Outcome for Australians’: PM

However, on Jan. 24, 2024, when asked about the promise on the stage three tax cuts, Mr. Albanese said his job was to get the best outcome for Australians.

“It’s to respond to the circumstances which we confront. And we know that there’s been considerable coverage about the pressure that is on low- and middle-income earners, particularly, with regard to cost of living,” he said.

Mr. Albanese would not elaborate on the full details of the tax plan and said he would be providing a full explanation of the government’s economic policy at the National Press Club on Jan. 25.

“I’m a leader who speaks at the National Press Club and makes myself accountable, I'll be giving a full exposition of economic policy and our response to provide assistance to middle Australia on cost of living at the National Press Club tomorrow,” he said.