Labor passes income tax cuts with support from the Greens
Parliament has passed Labor’s bill to decrease the lowest income tax rate from 16 per cent to 14 per cent from July 2026 to July 2027.
Labor’s Tuesday budget included a pledge to decrease the lowest marginal tax rate, positioned as a broad but modest cost-of-living relief measure.
“Every Australian taxpayer gets another tax cut from next year – all 14 million, not just some,” Treasurer Jim Chalmers and Prime Minister Anthony Albanese said in a joint press statement.
“Labor’s new tax cuts are modest but they will make a difference.”
Labor and the Greens voted in favour of the cuts on Thursday, while the Liberals and Nationals voted against them, as did the independents present.
The tax cuts are set to cost the budget $17.1 billion over the forward estimates.
Shadow treasurer Angus Taylor slammed the tax cuts in a media release, saying: “The Coalition will not support these tax changes that do nothing to address the collapse in living standards under Labor. Seventy cents a day, in a year’s time, is not going to help address the financial stress Australian families are currently under.”
Despite voting in favour of the bill, the Greens warned that the tax cuts would do little to alleviate cost-of-living pressure and called for higher taxes on billionaires and big corporations.
“An extra 73 cents a day in 15 months’ time won’t do much when your rent has already gone up hundreds of dollars a week,” Adam Bandt, leader of the Greens, said.
“Billionaires and politicians still end up with tax cuts four times as big as low-income earners.”
Allegra Spender, independent for Wentworth, who voted against the tax cuts, said the cuts would do little to address bracket creep and fall well short of broader tax reform that industry voices have been calling for.
“The Government has acknowledged they need to lower income taxes on workers, but this tax cut is basically the least they can do without blowing an even bigger hole in their budget balance. And bracket creep will wipe this out within 12-24 months of it coming into effect,” Spender said in a press release.
“Both major parties should commit to a broader reform process in the next parliament, to permanently reduce and rebalance the tax system away from income taxes, towards housing ownership, supporting business investment and innovation and the energy transition at least cost.”
