The Herald's View: Scrapping stage three tax cuts will be a broken promise
The federal government faces a defining choice between fiscal responsibility and political credibility in its first budget on October 25.
Whatever the problems with the stage three tax cuts, both Chalmers and Prime Minister Anthony Albanese unambiguously promised during the federal election campaign that they would allow them to take effect. No ifs and no buts. So, if they scrap stage three, they break a promise. “We must be serious about rebuilding our budget buffers – particularly given the deteriorating global outlook.”. As inflation has surged because of factors such as the war in Ukraine and excessive pandemic fiscal stimulus, central banks around the world have jacked up interest rates at an unprecedented pace.
But lower income earners benefitted in stage one and two two years ago and under stage three they will benefit again because the marginal tax rate will fall from 32.5 per cent to 30 per cent for people earning as little as $45,000. If Albanese and Chalmers break their promise on tax cuts, before building up a track record, they would just jump back on this treadmill.
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