Albo slammed for tax cut ‘betrayal’

Anthony Albanese is under pressure over his plan to rework stage three tax cuts ahead of Dunkley by-election. Picture: NCA NewsWire / Martin Ollman

Anthony Albanese is facing fierce pushback from all sides of politics as his frontbench attempts to sell the benefits of the government’s revamped stage three tax cuts.

The new package, unveiled by the Prime Minister on Thursday, would slash the tax cuts for higher income earners and redistribute it to workers earning under $150,000.

Describing Mr Albanese’s decision as a “breach of trust” which breaks his election promise to keep stage three unchanged, the Coalition has demanded Labor call an early election.

“It’s a betrayal,” Opposition Leader Peter Dutton said on Friday.

“It is not just some throwaway comment that he made at a press conference … he continued to repeat it.

“I just think most Australians don’t want a Prime Minister who looks them in the eye, tells them one thing, and then does completely the opposite.”

Mr Dutton questioned whether his sparring partner, former Labor leader, Bill Shorten’s lacklustre defence of Mr Albanese’s policy was a sign he planned to challenge the Prime Minister for the leadership in the near future.

Mr Shorten and Mr Dutton went head to head on the Today Show.

But Mr Shorten quickly shut down the speculation: “I’m defending the Prime Minister. I support this decision. I think he’s made the right call”.

The changes would reduce the lowest tax bracket from 19 per cent to 16 per cent for earnings under $45,000 and retain the 37 per cent tax rate for those earning between $135,000 and $190,000.

The 45 per cent tax bracket will now kick in for those earning over $190,000, down from the planned $200,000.

About one million taxpayers who earn more than $150,000 a year will be up to $4546 worse off than they would have been under the original stage three.

However, about 13 million people, earning between $45,000 and $135,000 will receive an extra $840 under the reworked plan.

The changes would add $28bn over the next 10 years to the government coffers through bracket creep, according to Treasury analysis also released on Thursday.

Mr Albanese refused to say he lied when he committed to stage three but said he accepted “responsibility” for the change in policy – nor would he concede the move amounted to a broken election promise.

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Mr Albanese argued changing economic circumstances forced his hand. Picture: NCA NewsWire / Martin Ollman

Finance Minister Katy Gallagher downplayed the criticism, insisting it wasn’t a decision the government took lightly.

“We knew going into this that there would be a lot of commentary around changing our position,” she said on Friday.

“But at the end of the day, it was really about what is the best way to reach people and provide cost of living relief.”

The government is hoping the package will be able to pass parliament ahead of the Dunkley by-election on March 2, creating a wedge for the Coalition.

Mr Shorten went as far as saying he’d be willing to put $10 on the Coalition falling into line and backing the changes rather than be the “party of higher taxes for Middle Australia”.

But while Mr Dutton indicated he was opposed to the plan, he stopped short of outrightly rejecting it.

“We’ll have a lot more to say about our tax policy. But we need to understand what it is,” he said.

Should the Coalition resolve to oppose the cuts, Labor would need to strike a deal with the Greens and two members of the crossbench to push the package through the Senate.

Greens leader Adam Bandt said he wants Labor to go further, suggesting high income earners shouldn’t get a slice of the tax cut at all.

“Our view is that if we’re going to change what was a fundamentally unfair package to start with, then we should make it fair,” he told ABC radio.

“We will be pushing Labor to do better because in the middle of a housing and rental crisis, we think that the government can do better.”