STEPHEN JOHNSON: Why Treasurer Jim Chalmers can’t be trusted to deliver tax cuts in a decade from now

Jim Chalmers is now promising a future government will probably provide income tax cuts within the coming decade following an independent Commonwealth agency’s warning that bracket creep will keep getting worse.

Inflation has been outpacing wages for more than a year, meaning Australian workers have been suffering a cut in real wages since July 2025, like they were from 2021 to 2023 during another period of aggressive interest rate hikes.

Pay rises to keep pace with inflation only pushes more people into higher income tax brackets, which is great for Federal Government revenue but bad for those trying to service their bills or make a crust.

The Treasurer on Thursday broke his silence, two days after the Parliamentary Budget Office warned Australian workers would be paying a record-high 28.6 per cent of their wages in tax within the coming decade unless bracket creep was addressed.

One dollar out of every four earned is already going to the taxman this financial year.

“Over that medium‑term trajectory, that 10‑year period that the Parliamentary Budget Office is talking about, I think it would be unwise to assume that there wouldn’t be more income tax cuts at some point in that 10‑year period,” Dr Chalmers told ABC Radio in Brisbane.

That courageously assumes a future government would honour an election promise to provide tax cuts, which is a stretch given both sides of politics have broken election promises and hate surrendering a great source of revenue.

Dr Chalmers seems to have missed the lessons of Labor securing an unlikely fifth term in 1993, after his prime ministerial hero Paul Keating and his then treasurer John Dawkins legislated “L-A-W law” income tax cuts, to match the Coalition Opposition’s generous tax relief policy but without a hated 15 per cent GST.

Five months after the election, the Budget deferred the second round of relief for another two years because of cost issues that made them unaffordable.

The broken promise was so unpopular Mr Dawkins resigned from Parliament just four months after the Budget.

As a PhD student at Australian National University in 2004, Dr Chalmers submitted a 99,478-word thesis on the Keating government - titled Brawler Statesman - but nothing was said about that broken promise.

In 2026, Labor has broken promises on negative gearing and capital gains tax concessions, making Dr Chalmers the custodian of Australia’s most unpopular Budget since 1993.

But Labor has at least delivered on the income tax front, starting with $268 that rolled out on July 1.

In a year from now, a permanent $250 Working Australians Tax Offset is also coming into effect, in tandem with another $268 in relief from tax bracket changes.

“We understand and embrace this responsibility to return bracket creep when we can afford to do that,” Dr Chalmers said.

“We’ve done that time and time again, and we hope to have the opportunity to do that again in the future.”

The problem is Labor’s $5.15 a week in tax relief, that came into effect a fortnight ago, hardly compensates for high inflation and wouldn’t even buy some sliced bread now at most local bakeries.

Household budgets are so tight the Commonwealth Bank’s own customer data released on Thursday showed little boost from the traditional end-of-financial year sales.

Labor’s spending as a proportion of the economy is at the highest level in four decades, outside of COVID, and the Federal Government is opposing a Coalition call to index tax brackets for inflation.

Until future governments are forced to cut spending to finance proper income tax relief, workers will simply be handed out crumbs of relief instead of enough loaves to make a few sandwiches for lunch.