Anthony Albanese
Taxpayers earning under $150,000 will get a greater tax cut under Anthony Albanese's proposal. Image by Lukas Coch/AAP PHOTOS
  • politics

Revamped income tax cuts clear their first major hurdle

Andrew Brown February 15, 2024

Low and middle income earners can breathe a sigh of relief after revamped income tax cuts cleared a major hurdle.

The tax changes passed the lower house of federal parliament with support from the coalition and cross bench.

Under the amended proposal, those earning under $150,000 will receive a greater tax cut than under the original plan.

Those earning above $150,000 will still receive a tax cut, but less than previously forecast.

The legislation will move to the Senate for debate and if endorsed take effect from July 1.

 Prime Minister Anthony Albanese said the tax cuts represented cost of living relief. Image by Lukas Coch/AAP PHOTOS 

Prime Minister Anthony Albanese said the tax cuts represented cost of living relief.

“This is indeed a great day, it is a great day on so many levels, this is a day in which every Australian will get a tax cut, all 13.6 million of them,” he told parliament.

“We want people to earn more and we want workers, every taxpayer, to keep more of what they earn.”

The coalition agreed to support the tax cuts, despite initially coming out against the measures.

The opposition did put forward an amendment to the bill, suggesting changing the legislation’s name to include the phrases “broken promise” and “entrenching bracket creep”.

The prime minister promised during the 2022 election campaign that Labor would not alter the stage three tax cuts, but said economic circumstances had changed since the original measures were brought in during 2019.

“This package is a package that doesn’t leave people behind who earn under $45,000 a year,” he said.

“Politicians will get less from this legislation, but average workers will get more.”

Treasurer Jim Chalmers
 The Treasurer says the tax changes are the most effective way to provide cost of living relief. Image by Mick Tsikas/AAP PHOTOS 

Treasurer Jim Chalmers said Australians were another step closer to having the tax cuts put in place.

“The tax cuts that we passed today are a combination of relief and reform and responsibility,” he told reporters in Canberra.

“More relief for middle Australia, better reform for our economy, and consistent with the responsible approach that we have taken to managing the budget and also managing the economy more broadly.”

The tax cuts were the ideal way to manage financial pressure for households, Dr Chalmers said.

“It became increasingly clear to us over the course of summer that the tax system and particularly the stage three tax cuts were the most effective way to provide more cost of living relief to more people without adding to inflation,” he said.

Liberal frontbencher Paul Fletcher said while the opposition supported the tax cuts, the amended measures remained a breach of trust.

“The prime minister promised Australians on 100 occasions that his government would support and maintain the currently legislated stage three tax cuts,” Mr Fletcher said.

“He said that before, during and after the election, and then in a cynical political manoeuvre, they dumped that commitment. 

“It is bad for our prospects for long-term tax reform.”

Opposition MP Bert van Manen said the tax cuts did not go far enough.

“We’re seeing nothing in this bill that will deal with the cost of living, $15 a week is not going to scratch the surface,” he said.