Scrapping the Stage 3 tax cuts would be “political suicide” for the Albanese Government, according to one of its own MPs.
Labor backbencher Mike Freelander said abandoning the changes just six months before they kick in would be a “betrayal” of voters given the Government’s repeated promises to retain them.
Dr Freelander’s warning came as Prime Minister Anthony Albanese argued the tax breaks would ease pressure on households by putting money back in their pockets.
Mr Albanese has also hinted the Federal Government could roll out further cost-of-living relief earlier than expected, leaving the door ajar for announcements ahead of the May Budget.
The fate of the promised Stage 3 cuts is again being debated as the Greens, crossbenchers and some economists continue to pressure the Government to dump the plan and spend the money elsewhere.
The Morrison-era measure — which is now forecast to cost more than $250 billion across the next decade — abolishes the 37 per cent marginal tax rate and lowers the 32.5 per cent tax rate to 30 per cent for people earning between $45,000 and $200,000.
Labor supported the changes in opposition and continue to do so in government, insisting time and again that its position has not changed.
Dr Freelander, who represents the seat of MacArthur in south-west Sydney, believes Labor would face severe political consequences if it reversed its position now.
“I think it’d be political suicide if we stopped the Stage 3 tax cuts,” he told The West Australian.
“We have promised them so many times and have reiterated our stance.
“I think to go back on that now would really be a betrayal of what we’ve promised people.”
The opposition has urged Labor to “unambiguously commit” to delivering the Stage 3 tax cuts so that workers can claw back earnings lost through bracket creep.
“Bracket creep is like the thief in the night. It is the tax increase Australians never voted for,” shadow treasurer Angus Taylor said.
The Government has tasked the Treasury and Finance departments with examining options for cost-of-living relief as it attempts to ease the pressure on families without adding to inflation.
The extra help could arrive sooner than expected with Mr Albanese not ruling out announcements ahead of the Federal Budget in mid-May.
The prime minister would not be drawn on whether the tax cuts would undermine efforts to tame inflation, but insisted Treasury and the Reserve Bank had already factored the spending into their forecasts.
The prime minister also argued the tax breaks amounted to cost-of-living relief for those in line to receive it.
“We think that in terms of income tax relief, that is one way that can assist people because it does mean extra dollars in people’s pockets,” Mr Albanese told ABC radio.
Dr Freelander said housing was “clearly” the biggest pressure on households at the moment, followed by the cost of groceries and transport.