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“I believe voters will give Labor a pass on this one.”
Under then-treasurer Scott Morrison’s three-stage overhaul of the tax system unveiled in 2018,lower- and middle-income earners were given tax cuts first,including through a tax offset that ended last financial year,with the final stage targeted at higher-income earners.
The stage three tax cuts would abolish the 37 per cent tax bracket,while the 32.5 per cent rate would be cut to 30 per cent for all incomes between $45,000 and $200,000.
This masthead revealed last month that analysis by the Parliamentary Budget Office showed men would get $160.6 billion of the tax cuts,while $82.9 billion would go to women.
The highest income bracket of over $180,000 will suck $117 billion out of the budget in tax cuts over the next decade,or 48 per cent of the total tax cut package. The $45,001 to $60,000 bracket will only get $2.7 billion,or 1 per cent of the tax cuts.
Treasurer Jim Chalmers is trying to claw back the nation’s $78 billion deficit as he prepares to unveil Labor’s first budget next month.
He will benefit from billions of dollars in increased revenue on the soaring commodity prices and low unemployment.
Labor is also hoping to claw back billions of dollars in cracking down ontax avoidance by multinationals,as well as targeting the previous government’s “rorts and waste”.
However,the government’s ongoing rorts and waste audit isn’t finding as much as previously hoped,according to government sources.
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Chalmers told this masthead that the government’s priorities for the budget were “already clear and haven’t changed”.
“The government’s focus is on building the resilience of our economy and our budget after a decade of waste and missed opportunities under our predecessors,” he said.
“Australians know we can’t make up for nine years of neglect in only a few months – it will take time to tackle the structural problems in our economy and budget,” he said.
“The October budget will provide responsible cost-of-living relief,boost the productive capacity of the economy,end the waste and rorts that were a hallmark of our predecessors and provide more opportunities to more Australians.”
Grattan Institute economic policy director Brendan Coates said there was a structural deficit of about 2 per cent of GDP and there was not a lot in Labor’s election platform to turn that around.
“Rorts and waste was only ever going to get them so far,” Coates said. “Because the size of those programs typically are not that large compared to where the federal government spends its money.”
Coates said the government would eventually have to make some “tough choices” which could include scrapping the stage three tax cuts. If it isn’t prepared to do that,Coates said the government would have to look at areas like superannuation tax concessions,negative gearing and trusts.
“We’ve permanently increased the size of government with things like the NDIS and aged care spending,and we need to pay for it,” he said.
“You don’t have to necessarily run surpluses. But running a structural budget deficit of 2 per cent of GDP is too big in a world where we now have interest costs rising from record low levels[and] government borrowing costs are going up as well.”
Cut through the noise of federal politics with news,views and expert analysis from Jacqueline Maley.Subscribers can sign up to our weekly Inside Politics newsletter here.