EDITORIAL: Minns’ tax attack a reminder of the real issues

Treasurer Jim Chalmers got a straighten-up of some significance this week as he desperately tried to regain some momentum for his beleaguered Budget.

And given that it came from one of his own side — NSW Labor Premier Chris Minns — it carried plenty of weight.

As Dr Chalmers fended off attacks centred around the Budget’s impact on the startup sector, capital gains tax and trusts, Mr Minns warned improved wage agreements from his State Government for nurses, paramedics and teachers were being undermined by growing Commonwealth tax burdens.

Income-earners paying the highest marginal tax rate of 47 per cent were effectively working half the week for the Federal Government, he said, and demanded more action to combat bracket creep — which occurs when inflation and pay rises push workers into the next tax bracket, meaning any financial gains are offset by higher taxes.

Just days after Opposition Leader Angus Taylor’s post-Budget pledge to end the “inflation tax”, Mr Minns declared families were being “stung” as pay rises pushed workers into higher tax brackets.

“Whether it’s in this Budget or it’s in the future, we do need to make sure that we’re doing everything we can to give more money back to working Australians,” he said.

“The top marginal rate is 47 per cent . . . you work Monday, Tuesday, and half Wednesday for yourself, and then Wednesday, Thursday, and Friday for the government, that’s a tough burden for a lot of families,” Mr Minns said.

Mr Minns has belled the cat on tax.

When Dr Chalmers handed down the Budget last week he declared it “the most important and ambitious Budget in decades”.

But he has fallen far short of delivering a reality which matches his over-the-top rhetoric.

For an example of major reform Dr Chalmers could do worse than look back at what his political hero Paul Keating delivered.

Under Mr Keating as treasurer, the top marginal income tax rate was reduced from 60 cents in the dollar when Labor came to power in 1983 to 47 cents in 1990.

And Mr Keating reduced government payments as a proportion of Gross Domestic Product from 27.3 per cent in 1985-86 to 24.2 per cent in 1990-91.

Government spending in 2026-27 is forecast to make up 26.8 per cent of the economy, the highest since 1986-87 outside of COVID.

Mr Keating — who intervened on Thursday in support of the Budget’s capital gains tax changes — was not without flaws.

But the historical comparisons are telling.

And on Thursday the latest statistics showed Australia’s unemployment rate has risen to a four-year high of 4.5 per cent and is now much worse than Treasury officials had feared little more than a week ago.

Meanwhile the tax-and-spend Albanese Government is allowing bracket creep to hurt the very people it says it is helping.

And all the while government spending drives up the debt of future generations.

That doesn’t sound like intergenerational equity.

Responsibility for the editorial comment is taken by Editor-in-Chief Christopher Dore.