Progressive think tanks say Labor entered “fantasy land” with the coalition to cut taxes | The Canberra Times

News, Federal Politics, Anthony Albanese, Jim Chalmers, Grattan Institute, Australia Institute

Progressive think tanks have devastated Labor for tossing their support behind tax cuts for people on incomes of up to $ 200,000 and getting rid of their controversial proposed changes to negative gearing. Both the Grattan Institute and the Australia Institute were stunned by Labor’s decision to abandon the major economic reforms promised in the last election. Opposition from both groups to the level three cuts is loud, despite a chorus of economists believing that the biggest change to the tax system since the GST was introduced will spur economic growth. On Monday, Labor officially announced it would support stage three of the Morrison administration’s tax cuts and not propose any changes to current negative gearing attitudes. Labor also confirmed it would make a promise to cut the 50 percent capital gains tax deduction in half. The executive director of the Grattan Institute, Danielle Wood, said “both sides of politics are now living in a fantasy land” and would create “significant long-term structural challenges for the budget”. “They both say we will cut income taxes significantly,” she said. “We won’t touch taxes, investments and capital, but we will spend more. In a world where an aging population increases our cost pressures and decreases our revenue base. A circle cannot be squared.” about these things. And we have both sides of politics, essentially pretending they can. And that means that at some point difficult decisions will have to be made. You are not open to these decisions. ”Party leader Anthony Albanese and shadow treasurer Jim Chalmers confirmed the changes in a joint statement. “Labor gives Australian working families security and clarity after two difficult years for our country and the world,” they said. “Our focus is on Australia emerging stronger and more resilient from this crisis – with an economy that works for working families, not the other way around.” Tax cuts that put workers with incomes between $ 45,000 and $ 200,000 in the same income tax bracket, should begin in mid-2024. There had been discussions within the party about whether the tax cuts, which are estimated to cost an estimated $ 137 billion this decade, should be lifted. Australia Institute senior economist Matt Grudnoff said politics stand in the way of good politics, claiming the tax cuts only worsen income inequality. “The benefits of the third tier income tax cuts will largely accrue to the highest income earners in Australia,” said Grudnoff. “Research from the Australian Institute shows that the top 10 percent of income earners receive more than half of the benefit, while the top 20 percent receive over 70 percent of the benefit.” Mr. Grudnoff noted that the tax level in Australia is low compared to other OECD countries. “As inequality is only getting worse in Australia, we need debate and better policies about properly taxing wealth and reducing inequality rather than making it worse,” he said. Westpac chief economist Bill Evans believes the change would likely increase productivity and participation. Mr Evans said the main impact of the cuts would incentivize workers in the economy and contribute to overall growth. “We need productivity and participation to fuel growth, especially given the shock we are getting from population growth,” he said. “I think it ticks a lot of boxes and when the time comes it won’t be so controversial and now that both parties are coordinated and the legislation is in place, we can at least look forward to it.” Labor has instead proposed proposing new measures to force multinationals to pay more taxes in Australia. With AAP our journalists work hard to provide the community with local, breaking news. Here’s how you can still access our trusted content:

/images/transform/v1/crop/frm/gbZxCg3zJpb4r79EPiJSKy/8d3af846-a270-49a7-911d-b3d7dec0637c.jpg/r12_567_4987_3378_w1200_h678_fmax.jpg

Progressive think tanks have devastated Labor for tossing their support behind tax cuts for people on incomes of up to $ 200,000 and getting rid of their controversial proposed changes to negative gearing.

Opposition from both groups to the level three cuts is loud, despite a chorus of economists believing that the biggest change to the tax system since the GST was introduced will spur economic growth.

On Monday, Labor officially announced it would support stage three of the Morrison administration’s tax cuts and not propose any changes to current negative gearing attitudes.

Labor also confirmed it would make a promise to cut the 50 percent capital gains tax deduction in half.

The executive director of the Grattan Institute, Danielle Wood, said “both sides of politics are now living in a fantasy land” and would create “significant long-term structural challenges for the budget”.

“They both say we will cut income taxes significantly,” she said. “We won’t touch taxes, investments and capital, but we will spend more. In a world where an aging population increases our cost pressures and decreases our revenue base. A circle cannot be squared.” about these things. And we have both sides of politics, essentially pretending they can. And that means that at some point difficult decisions will have to be made. You are not open to these decisions. “

Party leader Anthony Albanese and shadow treasurer Jim Chalmers confirmed the changes in a joint statement.

“Labor gives Australian working families security and clarity after two difficult years for our country and the world,” they said. “Our focus is on Australia emerging stronger and more resilient from this crisis – with an economy that works for working families, not the other way around.”

There had been discussions within the party about whether the tax cuts, which are estimated to cost an estimated $ 137 billion this decade, should be lifted.

Australia Institute senior economist Matt Grudnoff said politics stand in the way of good politics, claiming the tax cuts only worsen income inequality.

“Research from the Australia Institute shows that the top 10 percent of income earners receive more than half of the benefit, while the top 20 percent receive over 70 percent of the benefit.”

Mr. Grudnoff noted that the tax level in Australia is low compared to other OECD countries.

“With inequality only getting worse in Australia, we need debate and better policies to properly tax wealth and reduce inequality rather than make it worse,” he said.

Westpac chief economist Bill Evans believes the change would likely increase productivity and participation.

Mr Evans said the main impact of the cuts would incentivize workers in the economy and contribute to overall growth.

“We need productivity and participation to fuel growth, especially given the shock we are getting from population growth,” he said.

“I think it ticks a lot of boxes and when the time comes it won’t be so controversial and now that both parties are coordinated and the legislation is in place, we can at least look forward to it.”

Instead, Labor has proposed new measures to force multinationals to pay more taxes in Australia.

Our journalists work hard to provide the community with local, breaking news. Here’s how you can still access our trusted content:

Comments are closed.