Stage 3 tax cuts under the spotlight as opposition decides position

The future of the amended Stage 3 tax cuts could be decided in the opposition party room, with the Coalition expected to decide on its final position on the amended policy.

Legislation backing broader tax cuts will be brought forward to the House of Representatives on Tuesday, as federal parliament meets for the first sitting day for 2024.

While the government has come under fire for breaking an election commitment to leave the Stage 3 tax cuts untouched, the opposition is expected to cement some form of support for the changes at a joint party room meeting on Tuesday following a shadow cabinet meeting on Monday night.

Opposition Leader Peter Dutton has remained critical in the meantime.

“Most Australians are still shell shocked by the fact we have a prime minister who has looked the Australian public in the eye and completely told a lie to them,” Dutton told reporters on Tuesday.

According to a media report, Dutton is set to accept the revised package but the Coalition would ramp up calls for more generous tax cuts that spare workers from the impact of bracket creep when their earnings rise above tax thresholds that apply a higher tax rate.

Liberal sources, speaking anonymously to detail private conversations, said the majority of Coalition MPs agreed the opposition should seek to amend the bill but would ultimately vote in favour of it if the amendments failed,” the Sydney Morning Herald reported.

Only a small handful of MPs wanted to oppose the legislation, the sources said.

But Prime Minister Anthony Albanese has maintained the tax cuts changes were necessary, with most workers expected to benefit under the revised proposal.

“This will be a debate that we’re not just willing to have, but enthusiastic about having, because it is about looking after people,” he told a caucus meeting on Monday.

“What we have done is make not an easy decision.

“We’ve made a right decision at the right time, for the right reasons.”

Under the tax changes, people earning under $150,000 will receive a greater tax cut, while those earning above that amount will still receive benefits, but less than previously forecast under the original stage three proposal.

Albanese had signalled he would want to see the tax cut changes passed through federal parliament by Easter before they would come into effect in July.

A new economic analysis showed electorates held by Nationals MPs were expected to gain the most from the altered policy.

Findings released by the Australia Institute revealed voters in Nationals-held electorates would receive a $326 tax cut each, while those in Liberal seats would be $226 better off.

Voters in electorates held by the government would receive an extra $229 per person under the modelling.

The institute’s senior economist Matt Grundoff said the majority of taxpayers would be winners under the tax changes.

“National Party electorates are the biggest beneficiaries, to the tune of $451 million over the coming financial year, because the benefits of the modified cuts flow disproportionately to poorer rural electorates,” he said.

“Redistributing the bulk of the tax cuts to low and middle-income earners will help those doing it the toughest while preserving the progressive nature of our tax system.”

This article was first published by AAP.