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MPs lean on Anthony Albanese, but dumping of tax cuts quashed

MPs were persisting in lobbying Prime Minister Anthony Albanese to dump controversial Stage 3 tax cuts on Tuesday, but senior government sources quashed speculation that any moves would be made.

Speculation was hot in Canberra on Tuesday that the government might drop its often-repeated commitment to the cuts after a the PM was reported to be waiting on a mounting backlash until ditching them.

The New Daily understands senior MPs are lobbying Mr Albanese persistently and in private about overturning the policy.

Opponents say many MPs already spoke out against the cuts when first proposed and a movement to dump them, while nothing like a revolt, is growing alongside fears about their impact on the budget and the government’s agenda.

Nonsense?

But even considering a backflip at this time was nonsensical, one source said, and would have the government inflicting major damage to its own credibility to stop a policy that not scheduled to affect the budget until 2024.

“There has been no discussion at all in caucus,” the source said. “These measures don’t even take effect for two years.

“What we are seeing is the government being dragged by those on its left and its right over an election commitment.”

The Greens and Coalition backbencher Russell Broadbent joined calls for the cuts to be overturned on Tuesday.

The cuts are already legislated but not due to take effect until 2024.

Dutton’s dream?

Government sources say the tax cuts are too bound up with the credibility of the Treasurer and the PM to ever be undone.

“The only person who really wants us to do this is Peter Dutton,” a Labor source said.

Opposition Leader Peter Dutton has been road testing attack lines on the government but none has yet cut through. If the Labor duo had broken a solemn, oft-repeated promise it would be difficult for a line from Mr Dutton not to stick.

The Coalition leader was shown to be languishing in a recent Newspoll which had him on the lowest preferred PM rating recorded since the brief reign of Brendan Nelson as the party’s leader (59-25).

Independent economist Saul Eslake said an argument could be made for repealing the cuts to address the nation’s  ballooning debt. But he believed the frequency with which the government had affirmed them meant repeal a non-starter.

“Both [Jim] Chalmers and [PM Anthony] Albanese appear to have been pretty emphatic since the election, having made that promise during and before the election campaign, that the tax cuts would stand as legislated,” he said.

Mr Eslake said he expected the government would have more success instead by focusing its energies on seeking a fresh mandate for wide-ranging reform.

“The template would be [for the Labor Party] to argue for a broader tax reform mandate of the 2025 election, which may well include restructuring the tax scales to counteract the impact of the ones that are currently legislated,” he said.

Ideas for tax reform cited by some include a wealth tax that would standardise how assets are taxed but also answer the steady accumulation of wealth outside salaries and homes beyond the hand of government.

A credibility concern

The cuts will create a flat tax rate of 30 cents in the dollar for anyone earning between $45,000 and $200,000.

It is estimated the change will cost the Australian economy more than $180 billion by 2031-2032.

Labor had backed Stages 1 and 2 of the Coalition’s tax cuts but opposed Stage 3 in Parliament but the tax bill unnecessarily bundled all three together and made support for a lower-income reduction contingent on tax cuts for the wealthy.

A year ago, Mr Albanese committed Labor to supporting the package if it won government.

Government MPs fear the Opposition would frame any changes to the policy as a broken promise and brand the government as lacking in credibility.

MPs fear any fallout would extend to the reputations of Mr Albanese and Dr Chalmers, who have publicly affirmed the tax cuts several times, but also to the Labor Party’s reputation as a party that could be trusted with the budget.

“I said at the time that it wasn’t wise to consider that you knew in 2019 exactly what the economy would look like in 2024-25. But the Parliament made a decision,” Mr Albanese said in an address to the National Press Club in Canberra on Monday, to mark 100 days since winning the May federal election.

“We were in a situation of all or nothing at the time. And we voted for tax cuts, because to vote against the package would have been voting against tax cuts, including for people who desperately needed it at the time.”

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