Prime Minister Anthony Albanese
Prime Minister Anthony Albanese is spruiking tax cuts ahead of the Dunkley by-election. Image by Lukas Coch/AAP PHOTOS
  • politics (general)

Tax cut changes to be put to test as by-election looms

February 28, 2024

After weeks of controversy, the government’s tax cut changes have finally passed the Senate and will soon face their first major test of public opinion.

Voters will head to the polls in the Victorian seat of Dunkley on Saturday, following the death of Labor MP Peta Murphy who held the seat with a margin of 6.3 per cent.

The Albanese government is fending off a Liberal challenge in the Mornington Peninsula electorate southeast of Melbourne, as it heads into an election year. 

A recent YouGov poll of 394 Dunkley voters found the government was ahead of the Liberals at 51 per cent to 49 per cent, on a two-party preferred basis.

The amended tax package, which skews toward lower paid workers, cleared the Senate on Tuesday night and will take effect from July 1.

Prime Minister Anthony Albanese defended the government’s decision to backflip on an earlier promise not to alter the tax cuts legislated by the former coalition government as “good economic policy”.

“People know that this was not an easy decision, but it was the right decision done for the right reasons,” he told Seven’s Sunrise on Wednesday.

“Our objective here is for people to earn more and keep more of what they earn. 

“And that is what this is about, not leaving people behind.”

The changes mean Australians earning less than $150,000 will get a larger return than was promised under the so-called stage three tax cuts, which were legislated in 2018.

Those earning more than $150,000 will still receive a tax cut but it will be less than originally planned.

The prime minister is expected to hit the polling stations in Dunkley on Saturday to fight an expected swing against his government.

But Skills Minister Brendan O’Connor remains confident the changes will benefit voters in the electorate.

“We are seeing working families in Dunkley and across the nation earn more and keep more of what they earn,” he said during Question Time.

Liberal Senator Jane Hume.
 Jane Hume says the coalition has begun formulating its own counter to the government’s tax plan. Image by Lukas Coch/AAP PHOTOS 

Meanwhile, opposition finance spokeswoman Jane Hume said the coalition had already begun formulating its own counter to the government’s tax plan.

The Coalition would take to the next federal election an income tax package that provided “lower and simpler and fairer taxes”, she told Sky News.

“It will be a full tax package.

“Bracket creep is pernicious because it robs your future prosperity, and that’s something we’re acutely conscious of and something that we will we will be factoring into a coalition’s tax package.”