The Coalition will seek to amend but ultimately will not oppose Labor’s changes to the stage-three tax cuts, which redistribute benefits to low- and middle-income earners.
The Coalition party room met on Tuesday, endorsing a decision of shadow cabinet not to vote against Labor’s tax plan despite weeks of arguing that Anthony Albanese had lied and reneged on his commitment to the tax cuts before the 2022 election.
The decision clears the way for the $359bn tax cut package to pass parliament in February ahead of the changes taking effect in July, although the Greens are still in negotiations that could result in an inquiry into the changes.
Peter Dutton on Tuesday confirmed that the opposition “will not stand in the way of providing support to Australians doing it tough”, but indicated the Coalition would seek to make further tax changes in future.
“We are supporting this change not to support the prime minister’s lie but to support those families who need help now,” the opposition leader told a press conference. “Because Labor has made decisions that have made it much harder for those families and that is the position we have adopted as a party room.”
Dutton declined to detail exactly what the Coalition’s amendments would look like, saying they would be revealed in parliament. But he flagged the opposition would announce ahead of the next election “a significant tax policy which will reduce taxes for Australian taxpayers”.
“The finer detail of our policy will be announced nearer to the election,” Dutton said.
“You can’t redesign a tax package within a fortnight from opposition … it would be irresponsible to come to you today with a policy that’s not costed.”
But Dutton stressed the Coalition was “not walking away from the principles” of the original Morrison-era stage-three cuts. Some Liberal MPs had been strongly against the idea of changing the original plan, including Labor’s plans to reintroduce the 37% tax bracket which was to be abolished.
The Labor plan delivers bigger savings to all taxpayers earning less than $146,486 and doubles tax relief for those on the average income.
Coalition shadow ministers have been repositioning on Labor’s tax plan since last week, insisting that the Liberals and Nationals are the parties of lower tax and promising not to seek to repeal the changes.
Pressure has been mounting on the Coalition, with independent MPs including Zoe Daniel and Allegra Spender – who represent some of the electorates with the most high-income earners worse off as a result of the changes – declaring their support for Labor’s changes.
The decision not to oppose Labor’s plan creates a wider dilemma for the opposition over whether to recommit to remove the 37% tax bracket, the centrepiece of the original stage-three plan, or propose an alternative to redistribute the $28bn more tax raised by Labor’s plan over 10 years.
Coalition MPs told Guardian Australia the intent of amendments will be to highlight Labor’s “broken promise” on stage three, which proposed that all income between $45,000 and $200,000 should be taxed at a marginal rate of 30%. This could be done with symbolic second reading amendments.
Ahead of the Coalition party room meeting, Albanese queried if the stage-three cuts were “carved in stone” how the Coalition could have “changed their position” to now be in favour of the Labor plan.
“If they are fair dinkum then their response must be to not only oppose what we are putting forward with our legislation … but to promise to roll it back,” the prime minister told reporters in Canberra.
“Unless they do that, then it’s all just wind, it’s all just politics. What we are about is people, not politics.”
The Coalition’s decision also sidelines the Greens, who had attempted to use their Senate voting bloc to lobby for an increase to jobseeker payments and raising the tax free threshold from $18,200.
Albanese has effectively ruled out concessions to win parliamentary support for the income tax cuts, arguing they stand on their own merits and adequacy of government payments will be considered separately.