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Treasurer Jim Chalmers has dismissed suggestions the government should index tax brackets as Angus Taylor has pledged to do, warning that the opposition’s tax plan would add more than $250 billion in debt to the budget bottom line.
He has also sent the strongest signal yet that Labor’s changes to capital gains tax breaks could be walked back to allow more relief for business start-ups and venture capital firms.
Treasurer Jim Chalmers during a television interview last Wednesday following the budget.Alex Ellinghausen
In an interview on the ABC’s Insiders program on Sunday, Chalmers said the Coalition plan to index Australia’s tax rates to tackle bracket creep – when wages rise over time with inflation and push people into a higher tax bracket – was one of the least responsible he had ever seen.
“We are cutting income taxes five times using three different mechanisms, and the last time we cut income taxes Angus Taylor voted against it and said he would repeal it,” he said.
“Angus Taylor will be adding a quarter of a trillion dollars to national debt [by indexing the tax rates]. That would cost tens of billions of dollars in extra debt interest because he has an uncosted, unfounded tax announcement, which was all about trying to stave off One Nation.”
“There are a number of problems with what Angus Taylor is proposing but overwhelmingly, this extra quarter of a trillion in debt and tens of billions of dollars in debt interest makes his budget reply the least responsible I’ve seen.”
Opposition Leader Angus Taylor.Alex Ellinghausen
Taylor dismissed modelling released by Labor on Friday that estimated the opposition’s tax proposal would cost $35 billion, not $22.5 billion, over four years and up to $250 billion over a decade.
“That is their tax hike, that is their planned income tax increase,” Taylor said in an interview on Sky News.
“If Labor wants to crow about their planned income tax increases, $200 billion, that is all coming away from the private sector, that is a plan to grow government and shrink the private sector forever.”
Chalmers said Labor was “enthusiastically” returning additional tax collected because of bracket creep in a more responsible way than the Coalition would, adding “we have created room to return more bracket creep into the future” – widely expected to be future increases in tax write-offs.
On the impact of the CGT changes, Chalmers said the government recognised “that start-ups and venture capital, and particularly the tech sector, have got a different kind of cost-based calculation”.
“It’s not unusual after a big tax change is announced for there to be consultation on implementation, and we flagged for some time that we are prepared to do that, and that’s already begun.”
Taylor said the Coalition’s immigration policy would cut “mass migration” by at least 70 per cent, to below about 200,000 people a year, by tying migration to the number of new houses built.
“I’m not going to declare that number until we know how many houses are being built and we’ll know that in the next little while,” he said.
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James Massola is chief political commentator. He was previously national affairs editor and South-East Asia correspondent. He has won Quill and Kennedy awards and been a Walkley finalist. Connect securely on Signal @jamesmassola.01Connect via X or email.From our partners