Labour’s renewed stage 3 tax cuts have been approved by Parliament, guaranteeing taxpayers further relief on 1 July.
After a vote was called in the Senate on Tuesday afternoon, the Coalition reluctantly supported the government’s tax reform that will mean Australia’s 13.6 million taxpayers will receive tax relief from mid-year.
At a press conference following the passage of the fiscal package, Prime Minister Anthony Albanese hailed the change as a “huge victory” for Australian workers.
“Australians are earning more and will be able to keep more of what they earn,” Mr Albanese said.
The Prime Minister, who received significant criticism from the Coalition for his policy retreat, then took aim at the opposition for its response.
‘When this was announced, first [the Coalition] ‘They said they would oppose it, then they said they would fight it, then they said they would repeal it, then Peter Dutton called a federal election on this policy before voting for it.’
Before the final vote, opposition finance spokeswoman Jane Hume told the Senate the Coalition would not oppose tax relief for Australians.
“But that doesn’t mean we approve of the lie that was told,” Senator Hume said, pointing to the government’s broken promise to alter the fiscal package.
Labour’s revised stage 3 tax cuts have been approved by parliament, guaranteeing taxpayers further relief on 1 July.
The Greens, who attempted to refer the legislation to committee, failed to gain support for their proposal.
The Albanian government’s realignment of stage 3 tax cuts keeps the tax-free threshold at its current rate of $19,200, reduces the rate on income earned up to $45,000 to 16 percent – down from 19 percent – and reduces the rate of $45,000. to $135,000 for the 30 percent tax bracket, compared to 32.5 percent.
Additionally, the 37 percent tax bracket will remain between $135,000 and $190,000, after which the top marginal tax rate will begin to be $190,000 at a rate of 45 percent.
The reform usurps tax changes, introduced by the then Morrison government in 2019, which would have created a single tax bracket of between $45,000 and $180,000 at a rate of 30 per cent.
Despite offering additional relief to taxpayers squeezed by high interest rates and still high inflation, Albanese has failed to gain more support in opinion polls according to Newspoll and Resolve.
The Coalition has promised to develop a tax reform package before the next federal election, scheduled for May 2025 at the latest, that would be “in line with the stage 3 tax cuts”.
The bill’s passage comes just days before the crucial Dunkley by-election, which will be a litmus test for central Australia under cost-of-living pressure.
Albanese and opposition leader Peter Dutton have downplayed their chances of electoral success in Saturday’s by-election.
The seat, on the Mornington Peninsula southeast of Melbourne, became vacant following the death of former Labor member Peta Murphy, who died in early December, aged 50.
The reform usurps tax changes, introduced by the then Morrison government in 2019, which would have created a single tax bracket between $45,000 and $180,000 at a rate of 30 per cent.
In Saturday’s election, community leader and school teacher Jodie Beylea, elected by Albanese, will face three-time Frankston Council mayor Nathan Conroy, the Liberal Party candidate.
Speaking in the chambers of their respective parliamentary parties on Tuesday, Albanese and Dutton diluted expectations of winning the seat, citing historical data which they claimed showed achieving victory would be a difficult task.
Labor is widely expected to retain the seat, which it holds by a two-party preference margin of 6.3 per cent, while Coalition strategists hope it can secure a swing of between 3 and 4 per cent.
The election contest in Dunkley, which has a high proportion of highly indebted households and borrowers, is seen as a crucial test for the Albanian government in its record of easing current pressures on the cost of living.
Likewise, Dutton’s strategy for the next federal election, which targets similar seats in the outer suburbs, will also be tested.