Liberal Senator Jane Hume says it would be ‘very brave’ of the government to scrap legislated stage three tax cuts

Shadow finance minister Jane Hume has demanded the government go through with stage three tax cuts after it all but acknowledged the measure could be under review.

The remaining phase of the legislated tax agenda will come into effect in mid-2024 and will see cuts of $9,075 to those earning more than $200,000.

Finance Minister Katy Gallagher said although the government hasn’t changed its position it took to the election, economic circumstances have certainly changed since May.

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“We haven’t changed our position on stage three, but I think we are being upfront and the Treasurer and I have been trying to do this since coming in to government,” she told ABC Radio National.

“Let’s not pretend the economic circumstances aren’t changing and haven’t changed since May.”

Speaking to Sky News Australia Ms Hume said it would be a “brave” Labor government that would walk back on an election commitment.

“We would urge the Labor government to keep its promise to all Australians that it made during the election campaign,” she said.

“To continue with those stage three tax cuts. In fact we would think during a cost-of-living crisis that increasing taxes is exactly the wrong policy.

“They’re already budgeted for; they have been since 2019. These tax cuts are already there.

“They would have to repeal legislation in order to not go ahead with it.

“It would be a very brave Labor government indeed that would walk away from a commitment it has made to the Australian people just a few months ago.”

The Reserve Bank on Tuesday lifted the official cash rate by 25 basis points to 2.60 per cent with Governor Philip Lowe saying it was committed to bringing down inflation to its target of two to three per cent.

He said Tuesday’s rise “will help achieve a more sustainable balance” of demand and supply in the Australian economy, flagging future hikes “over the period ahead”.

Acknowledging this, Ms Gallagher said it was the responsibility of the government to make “affordable, sustainable targeted” decisions ahead of its October 25 Budget.

“We are in this high and rising inflation environment, we have got rising interest rates, we’ve got falling real wages – the global outlook is deteriorating,” she said.

“I think the responsibility for us is to make sure the decisions we are taking in the Budget are the ones that are responsible, affordable, sustainable, targeted and the right decisions.”

The third stage will also see the 37 per cent tax bracket scrapped all together, while Australians earning between $45,000 and $200,000 will come under the 30 per cent bracket which will be cut from 32.5 per cent.

Costings by the Parliamentary Budget Office estimate the cuts will cost $243 billion to the budget over the next decade.

Several crossbenchers across the House of Representatives and the Senate are in favour of delaying the tax cuts or having them axed.