The federal government appears set to maintain income tax cuts that will predominantly benefit high and middle-income earners in this month's budget, despite looming speculation the multi-billion dollar package would need to be pared back amid a worsening economic outlook.
The ABC understands it is unlikely there will be any change to the stage 3 income tax cuts in the October 25 budget, which were legislated under the former Coalition government and are due to come in to effect in 2024.
They will see the same 30 per cent tax rate for all Australians earning between $45,000 and $200,000 and are expected to cost the budget more than $240 billion by early next decade.
Appearing on the ABC's Insiders program on Sunday, Opposition Leader Peter Dutton argued the government appeared to be reserving the right to pare back the tax cuts later on.
"The fact is, this is not an issue now about tax cuts, but it's about whether you can trust Anthony Albanese and the Labor Party," he said.
"They've still got it seems in their back pocket the prospect or option to reverse this key promise they made at the election sometime between now and the next election."
Government under pressure to scrap tax cuts amid worsening economic outlook
The government has come under pressure from some crossbenchers and economists to scrap or pare back part of the package.
While the prime minister and Treasurer Jim Chalmers have repeatedly said the government's position has not changed, in recent days both have been escalating their case for winding them back, warning difficult spending decisions would need to be made in the upcoming budget to curb inflation.
Since Labor committed to implementing them as a pre-election promise, the global economic outlook has worsened.
Inflation and interest rates are rising, there is the prospect of a recession in the United States and the budget bottom line is also being squeezed by the rising annual costs of five big spending areas including health and the National Disability Insurance Scheme (NDIS).
On Sunday, Mr Albanese reiterated those concerns when asked if he would amend the tax cuts, while stressing several times the government's position on the tax cuts had not changed.
"We've seen the fastest, most consistent tightening of monetary policy across the global advanced economies by central banks in decades," he said.
"At that time fiscal policies should work in concert with that rather than against them.
"That is what we have said, that's the context in which we're framing a budget."
But Mr Dutton on Sunday sought to continue to frame the debate as one about trust, rather than economics.
"I think most Australians would be astounded that Anthony Albanese was on the cusp of betraying them or may do or is contemplating doing that in the next budget or the one after," he said.
"The Labor Party supported the legislation in the Parliament and the Australian prime minister promised at the last election on multiple occasions he wouldn't step back from it and it seems he is still contemplating that sometime between now and the next election, and I think that would be an unforgivable and ridiculous mistake."
