Coalition won’t oppose Labor’s tax cuts plan, clearing path for them to pass Federal Parliament

Bigger tax cuts for lower and middle income Australians have been all but assured with the coalition agreeing to wave through the federal government’s tweaked package.

Opposition Leader Peter Dutton said he “would not stand in the way of those doing it tough” and in clear need of tax relief.

“We’re supporting this change not to support the prime minister’s lie but to support those families who need help now,” he told reporters on Tuesday.

The coalition has consistently condemned the government for breaking its election promise to leave the cuts untouched.

Mr Dutton said the opposition would take a significant policy to reduce taxes for Australians to the next election.

Treasurer Jim Chalmers introduced laws backing the broader stage three package to the House of Representatives on Tuesday, during the first sitting day of federal parliament for 2024.

Dr Chalmers said the changes would mean more tax relief for more people.

“It’s about recognising that aspiration in this country is not and should not be limited to people whop are already doing pretty well. Middle Australia is aspirational Australia,” he told parliament.

“This is good for workers and it’s good for our economy. This is not relief or reform, this is relief and reform, more relief for middle Australia and a better reform for our economy.”

Prime Minister Anthony Albanese had previously signalled he would want to see the tax cuts passed into law by Easter, before they would come into effect in July.

The treasurer said the tax cuts would not impact on inflation.

“Tax relief rolls out over the course of the year, not in a single payment, so its effect is staggered. It begins to flow from the middle of the year when inflation is expected to moderate further,” he said.

Mr Albanese has maintained the changes were a difficult but ultimately right decision made in the interests of middle and lower income earners.

Under the revised package, people earning less than $150,000 will receive a greater tax cut, while those earning above that amount will still receive benefits but less than previously forecast.

Dr Chalmers said while the changes to stage three came with political risk, they were necessary due to the economic environment.

“We knew that it would be politically contentious and contested to amend the tax changes which were legislated five years ago when the world was a very different place,” he said.

“Australians understand that when economic circumstances change, the right thing to do is improve and align our economic policy as well.”

Economic analysis shows electorates held by Nationals MPs would gain most from the altered policy.

Findings released by the Australia Institute reveal voters in Nationals-held electorates would receive a $326 cut, while those in Liberal seats would be $226 better off.

Voters in electorates held by the government would receive an extra $229 per person.