Treasurer Jim Chalmers has revealed the cost of the stage three tax cuts has jumped by $11 billion in a move likely to resurrect the political debate over the fairness of the income tax relief for workers on higher incomes.
In an interview with Radio National on Thursday morning Chalmers said the latest Treasury costing of the policy had grown from $243 billion over ten years to $254 billion.
Treasurer Jim Chalmers has revealed the cost of the stage three tax cuts has grown by $11 billion.Credit:Alex Ellinghausen
“I think we’re expecting that equivalent 10 year cost to be around $254 billion over 10 years. And I think, from memory, the forward estimates cost is a bit under $41 billion, which is just the update on those already legislated tax cuts,” Chalmers said.
“It’s been pretty clear to everyone … on all sides of this conversation over the last few weeks that these tax cuts make an impact on the budget….But I think the point that we’ve been making is that they come in in a couple of years’ time.”
“The budget is not going to be about those tax cuts. It’s going to be about, really, three things: responsible cost-of-living relief. Secondly, targeted investments in a stronger, more resilient economy. And thirdly, starting to unwind this legacy of waste and rollouts in the budget, which has given us that trillion dollars of debt in the first place which is becoming more and more expensive to service.”
Treasury officials were asked to prepare a new cost estimate for the stage three tax cuts earlier this month after a week in the which the federal government faced repeated questions about the income tax relief prompted by the furious debate over the now abandoned tax cuts proposed by the British government.
Prime Minister Anthony Albanese then rebuffed talk of an overhaul of the tax cuts for workers earning more than $45,000 a year.
Chalmers will deliver his first budget on Tuesday and has been preparing the ground for a difficult set of figures due to international difficulties and what he said were booby traps set by the former Coalition government.
“Our predecessors more or less booby trapped the budget with a bunch of spending, some billions of dollars in spending, which is unavoidable [and] which we’ve had to find room for,” Chalmers said on Thursday.
“All budgets are being buffeted. The economy is being buffeted by a combination of natural disasters, rising inflation, deterioration in the global economy and some pretty serious, structural, persistent spending pressures in the budget as well.”
The Sydney Morning Herald and The Age reported on Thursday that preliminary work by the government’s audit of programs and promised savings has uncovered $6.4 billion in extra spending that will have to be shoehorned into the budget to ensure continued services such as aged care and COVID vaccine booster shots.
More to come.
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