Amazingly, Labor will not make changes to the stage three income tax cuts if it wins the upcoming federal election.
The legislated tax cuts are due to take effect as from 1 July 2024 and will see a 30% tax rate applied to all income between $45,000 and $200,000, while the 37% tax rate will be abolished.
It has been estimated the tax cuts will cost $137 billion between the date of their implementation and the end of the decade.
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From The AFR:
Following several days of conversations, Labor’s hierarchy has decided against trying to either unwind or amend the cuts if elected…
Leader Anthony Albanese had always insisted Labor would not make a final decision on its position until closer to the election, but it was decided in May to make the decision during the parliamentary winter break and get it off the agenda…
Unravelling them had the added potential of a messy Senate battle post-election.
These tax cuts will overwhelmingly benefit people earning over $180,000 a year and will cost $17 billion a year from financial year 2025.
In turn, the stage 3 tax cuts would necessarily increase inequality without providing much stimulus to the economy, since most of the extra disposable income received by high income earners would be saved rather than spent. The $17 billion a year cost of these tax cuts would also help lock in permanent budget deficits.
As an alternative, Labor should have scrapped the Stage 3 tax cuts and instead targeted tax relief at workers further down the income ladder. While this wouldn’t improve the budget deficit, it would obviously be more progressive, would reduce inequality, and would provide more economic stimulus (other things equal).
The bigger question is: does Labor actually believe in progressive taxation? Because its reluctance to oppose the stage 3 tax cuts, alongside its rabid support of lifting the superannuation guarantee (which punishes lower income earners), suggests it does not.
In which case, why vote for Labor when it is merely a Coalition-lite copy? Why not just vote for the real thing?
Labor’s adamant refusal to adopt genuine working-class policies while becoming more woke has resulted in three straight election losses to arguably the most corrupt government in our modern era.
It is only the Morrison Government’s bungling of everything that could deliver Labor a Steve Bradbury moment that prevents a fourth straight election loss.
I ask again: What is the point of Labor? The party needs to badly reconnect with its base.
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