The opposition leader, Peter Dutton, has demanded Anthony Albanese call an election to win a fresh mandate for the revamped income tax plan because it is a “significant change” to stage-three cuts that favoured high-income earners.
Labor’s new tax cuts, unveiled by the prime minister on Thursday, would give back $359bn over 10 years to Australians, delivering bigger savings to all taxpayers earning less than $146,486 and doubling tax relief for those on the average income.
The Albanese government aims to steer the tax cut package through parliament but is facing fierce opposition from the Coalition, which has vowed to “fight” the “broken promise” at the Dunkley byelection on 2 March and beyond. Labor must also manage the Greens, who say it should take more away from high-income earners.
On Thursday Dutton dialled up the Coalition’s political attack by seizing on the revelation contained in Treasury advice that the tax cuts are $28bn less generous over 10 years than the Morrison government’s stage-three plan.
Although 84% of taxpayers are slated to be better off when the tax cuts apply from July, Dutton told reporters in Brisbane that “it won’t be 1.8 million people who are affected adversely by the prime minister’s change it will be something like 4 million Australians”.
The claim is based on a Coalition analysis using Parliamentary Budget Office tools to project the number of income earners taking home more than $150,000 by the end of the decade.
Dutton – who earlier on Thursday falsely accused Labor of using taxpayer-funded ads to spruik the tax package – said Albanese now had a “huge credibility problem” and had “trashed his reputation” by abandoning stage-three cuts.
“I’d say to the people of Dunkley and the broader Australian people: if this prime minister is prepared to look at your neighbour in the eye and lie to him or her, you are next,” he said.
“I think if the prime minister has a very significant change to make and he wants to renege on an election commitment … I think he should call an election and put the changed position to the Australian people.”
The Coalition has backed away from an earlier suggestion by the deputy Liberal leader, Sussan Ley, that it could repeal the cuts and Dutton sidestepped a question about whether it would overturn more generous cuts for low- and middle-income earners at the next election.
Earlier, the prime minister stared down questions at the National Press Club about whether the new package meant the government had broken an election promise to implement the stage-three plan. The new package halves the benefit to people earning $190,000 or more by giving them tax cuts of $4,500, down from $9,000.
“We are being very upfront with the Australian people that when economic circumstances have changed, it is a responsible thing to do to change our policy,” Albanese told reporters in Canberra.
“When lower- and middle-income earners are saying that they are under financial pressure … as prime minister, I have a responsibility to act and that is what we are doing.”
Albanese said the new tax package was “overwhelmingly” the best way to deliver cost-of-living relief, according to the Treasury, and was “absolutely” the right thing to do.
Although the new policy retains the 37% tax rate for income between $135,000 and $190,000, the average tax rate paid will fall from 25.5% to 23.9%, which the government says indicates it is fighting bracket creep in a fairer way for middle-income earners.
Albanese said the government was “addressing the issue of bracket creep with our changes” and that “middle Australia is the big focus with this plan”.
Asked about the $28bn more revenue collected by the new package and whether more could be done to fight bracket creep, Albanese noted the government was lifting the highest income tax bracket from $180,000 to $190,000, the first such increase since 2008.
“The previous mob sat there for a decade and didn’t do anything about it,” he said. Referring to the stage-three tax cuts, he added: “They said in five years’ time, down the track we will do something.”
According to the Treasury advice, the tax package will not affect inflation because the $1.3bn less tax collected over four years is too small.
The Treasury advice says the new plan will also increase labour supply by 0.25% or 930,000 hours a week, more than double the benefit of stage three.
The Greens leader, Adam Bandt, told reporters in Melbourne that his party, whose 11 Senate votes will be needed to pass the package, will “keep up the pressure to fight for more for low- and middle-income earners”.
“Many people are still being left behind and meanwhile Labor is giving politicians and billionaires a $4,500-a-year tax cut, three times as much as the average wage earner,” he said.
He said the Greens would “fight for fairness” in the parliament as the tax changes go through – “because for many people, this won’t be enough to deal with soaring rents and mortgages”.
Albanese said he was “confident” the package would pass parliament. He said tax cuts “will not be the end” of cost-of-living relief, but did not commit to further improvements for those receiving government payments. He noted previous measures such as increases to rent assistance and jobseeker had been “targeted at people outside the tax system”.
