The opposition has continued attacking the government over breaking its promise on the cuts and is warning more Australians will pay more tax over the coming decade due to bracket creep, pointing to the extra receipts the government expects.
While it is yet to decide whether it will support Labor’s changed plan, there is speculation the coalition will move to amend it, then offer its backing to avoid a political attack for not supporting lower taxes.
Treasurer Jim Chalmers will introduce legislation for revised stage three tax cuts when parliament resumes on Tuesday and says it is time other political parties come to a position.
“I say to the coalition and to the Greens: don’t stand in the way of a bigger tax cut for more workers to help with the cost of living,” he told ABC on Monday.
“This is an important opportunity to do the right thing by people who are doing it tough.”
With most of the focus on short-term winners and losers, the Grattan Institute has investigated the impact of Labor’s tax package over 10 years.
The policy think tank found taxpayers earning about $68,000 a year would pay $8040 less over the period compared to the originally legislated stage three tax cuts.
Those who jump into the next tax bracket due to wage rises – otherwise known as bracket creep – would still end up paying less.
Opposition finance spokeswoman Jane Hume said the Liberal Party will always back lower taxes.
“When you keep bracket creep in your tax system, you are robbing your future prosperity,” she told reporters in Canberra.
The top 10 per cent of income earners on salaries above $130,000 were projected to pay at least $22,800 more over the decade than under the original plan, with the wealthiest workers to part with up to $45,000 more.
Under Labor’s changes, a person earning a wage of $73,000 will get a tax cut of more than $1500 a year.
At the upper end, the tax cuts for those earning $200,000 will be slashed from $9075 to $4500.
All 13.6 million taxpayers will pay less under the changes and low and middle-income earners will get a bigger cut than promised under the original scheme, although the benefit for those on the highest incomes will be pruned back.
Over the next 10 years, an average Australian on $73,000 would save more than $21,600 in tax due to the changes, analysis from the treasurer’s office shows.
But the biggest loser of the revised tax plan could be the federal budget with a $20 billion a year hit to the bottom line, the Grattan Institute warned.