The Squiz  

The Albanese Government has confirmed what has been speculated on for quite some time – it wants to change the stage 3 tax cuts that are due to kick in from July. PM Anthony Albanese hasn’t announced the plan that was given the tick by his colleagues yesterday – that will happen at his National Press Club address today. He says he’ll use that occasion to give “a full exposition of economic policy and our response to provide assistance to middle Australia on cost of living”.

So explain these stage 3 tax cuts… 

The previous Coalition Government legislated a series of tax changes with the support of Labor. The already implemented first and second stages lowered the tax bills of low and middle-income earners. As for stage 3 [and pause for a deep breath…] – it would have created a single 30% income tax rate for those earning between $45,000-$200,000 a year and would give those at the top end a tax cut worth $9,075 a year. Cue criticism that high-income earners would disproportionally benefit from the measure worth almost $70 billion over 3 years. But under the changes Albanese wants to make, the tax cut our highest income earners would receive is $4,529 – aka half what was coming. And those earning between $50,000-$140,000 would get a bigger tax cut than the current stage 3 cuts provide. 

So the bottom line is…

There are 1.8 million high-income Aussies who won’t get the tax cut they were promised, but 12.5 million low and middle-income earners would be better off. The problem with that is some tax reform enthusiasts like the Coalition’s stage 3 tax cuts – they say it would attract smarty-pants international workers and increase productivity because of the economic incentive to work hard/earn more. And then there’s politics… The changes mean Albanese is breaking an election promise and will hand the Coalition a big stick to whack the government repeatedly with… Deputy Liberal leader Sussan Ley says the move shows the “election was won on a lie” and that it demonstrates that Albanese “can’t be trusted”. They’re lines we’ll hear from now to the next election so strap yourself in…