A political tennis match has erupted yet again over stage three tax cuts despite ongoing warnings it would come up at the expense of funding critical services in the coming years.
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Treasurer Jim Chalmers was left to defend a barrage of questions over whether the government is considering to amend or scrap stage three tax cuts scheduled to be implemented in 2024.
The cuts would see the 37 cent top income bracket cut back to 30 cents for people earning up to $200,000 per year.
Fractures in a united Labor have been evident over the last few days with a number of MPs believing the cuts should stay. Skills Minister Brendan O'Connor on Thursday claimed it could be "premature" to axe the measures which are touted to cost upwards if $20 billion a year in foregone revenue.
Dr Chalmers said Labor's position has not changed but flagged budgets he hands out would be sustainable and deal with the current economic challenges.
"We know that we've got these big, persistent structural pressures on spending," he said.
"So in the context of all of that, we need to make sure we're building our buffers to the extent that we can against what might come at us over the course of the next couple of years."
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Finance Minister Katy Gallagher on Wednesday hinted no measure was off the table, with speculation a decision has not yet been made by the expenditure review committee.
Economic policy director at Grattan Institute, Brendan Coates flagged the cuts would cost over $240 billion over the decade and were unsustainable. Especially, given the need on increased spending by government on aged care, health and the NDIS.
"Given the sheer size of the budgetary costs of stage three, you just give up so many opportunities to do more meaningful tax reform," Mr Coates told The Canberra Times.
"The stage three tax cuts makes it much harder for the the Albanese government to pursue its other policy priorities. Whether it be funding the services that Australians expect in aged care, in health care and the NDIS, or whether it be tackling ... structural tax reform that is going to give long term productivity dividends."
Deputy Liberal leader Sussan Ley also attempted to place heat on the government, claiming a possible scrap of the cuts would be Labor going back on an election pledge.
"This is tax relief that millions of Australians were promised, millions of Australians are expecting and millions of Australians are owed," she said.
"For people earning $45,000 to $120,000 a year, this is about reducing the tax on your next dollar from 32.5 cents to 30 cents. For those earning more than $120,000 but less than $180,000, it's about reducing your tax burden the tax on your next dollar from 37 cents to 30 cents."
It is widely accepted the introduction of stage three tax cuts benefit wealthier Australians on higher incomes.
Mr Coates also highlighted the economic environment from 2019 when the Coalition passed the cuts had changed due to the pandemic and ongoing uncertainty sparked by events such as the war in Ukraine.
"The original sin was always legislating these five years before they were going to take effect," he said.
Treasurer Jim Chalmers on Tuesday warned the global economy had deteriorated significantly in recent weeks, flagging "probable" recessions in major economies like the United States would have an impact on Australia's domestic outlook.
