Jim Chalmers says Labor’s Stage 3 tax cut plan ‘hasn’t changed’

Treasurer Jim Chalmers has reiterated Labor’s pledge to make three tax cuts in the new year as the country’s cost-of-living crisis lingers.

Mr Chalmers indicated that the Albanian government’s position on the tax plan remains firm.

“Our position on the tax cuts hasn’t changed,” he told reporters Monday.

The tax cuts, which are due to take effect in July 2024, are part of changes to the tax system introduced by the Morrison government.

Stage three involves eliminating the 37 percent marginal tax bracket for those earning $120,000 to $180,000.

The threshold for the highest marginal tax bracket of 45 percent will be raised to those earning over $200,000.

Tier three also means that anyone earning between $45,001 and $200,000 will receive the same 30 percent tax rate, with the majority of people in this group currently being taxed at the 32.5 percent rate.

Labor backed the plans when they were put to Parliament in 2019 and Prime Minister Anthony Albanese went to the 2022 election promising no changes would be made to the plan.

Australia’s current tax brackets are as follows:

  • Up to $18,200 – no taxes
  • $18,201 – $45,000: 19% tax rate
  • $45,001 – $120,000: 32.5% tax rate
  • $120,001 – $180,000: 37% tax rate
  • $180,001 and up: 45% tax rate

After phase three:

  • $18,200 – no taxes
  • $18,201 – $45,000: 19% tax rate
  • $45,001 – $200,000: 30% tax rate
  • $200,001 and over: 45% tax rate

The changes were introduced by the previous government to try to eliminate the rise in tax rates when inflation causes people to lose more income to taxes as they “crawl” into higher tax brackets over time.

Critics of the cuts claim the measures only halted the pay gap for the highest-paid workers, as those earning up to $120,000 – about 90 per cent of Australians – would only see a 2.5 per cent adjustment.

Mr Chalmers pointed out that the forthcoming budget will offer more opportunities to lower the cost of living for Australians.

“There will of course be some household living cost relief because we are working with the states and territories specifically on utility bill support,” he said.

“We will always do whatever we can to support people struggling with high inflation and provide responsible living cost relief, as we did in October, as we will do in May, if we can afford it.”

Originally released as Labor’s stage three tax cut plan ‘hasn’t changed’

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