Tax paid by higher income earners will vastly outstrip their growth in wages if the stage three tax cuts are pared back or abolished
for those on higher incomes, but will not dump them altogether as some demand.
Even though the tax cuts do not begin until July 1, 2024 when the shape of the economy is unknown, twice in recent days Treasurer Jim Chalmers has pointed to the chaos in Great Britain caused by new Prime Minster Liz Truss announcing tax cuts for high-income earners as the Bank of England is raising interest rates to fight rampant inflation.
The stage three tax cuts have already been legislated but the Greens and almost all the Senate independents want them unwound, meaning there would be no problem gaining requisite Senate support should Labor seek to change them.
It agreed to pass the legislation after its 2019 election defeat, but not before examining options which included capping the upper income threshold for the 30 per cent rate at $180,000. He has suggested keeping the 37 per cent tax rate on incomes above $120,000, which would reduce the annual cost of stage three from $21 billion to $12 billion.
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