Labor grilled for backing higher-income tax cuts

Opposition treasury spokesman Jim Chalmers has shot down claims Labor is at odds with its base during a fiery television interview with the ABC’s Patricia Karvelas.

Labor on Monday announced it would scrap the controversial negative gearing policy it took to the 2019 election and support stage three of the government’s income tax cuts.

Mr Chalmers previously claimed the tax cuts for people earning over $180,000 were unfair, and the “least likely to be effective”.

Karvelas took the Labor frontbencher to task, asking if Labor had raised the “white flag” on the issues at the expense of its traditional supporter base.

“What is your answer to those voters who are really thinking: what does Labor stand for now?” she asked?

Mr Chalmers said Labor was committed to low and middle income earners but the party had to “balance a whole range of considerations”.

“I recognise that there are a range of views in the community about these issues and some of them are strongly held and well motivated,” he said.

“I don’t actually fear a contest of ideas on these sorts of issues. I say to all of these people that we don’t take these decisions lightly.”

Karvelas also quizzed the Mr Chalmers on whether Labor had backed down due to the fear of a Coalition scare campaign.

“Why have you done it when you know what you have argued previously that it’s not equal?” she asked.

“Patricia, when we were asked about the three stages of the tax cuts, two years ago, we pointed out that we thought that stages one and two were better targeted,” Mr Chalmers said.

“They will tell you what this election will be about, it won’t be differences about these already legislated tax cuts, it will be whether we will have a stronger, more sustainable and inclusive society and economy after Covid than before.”

Karvelas pressed further: “Do you think the stage three tax cuts is a good economic policy?”

“Yes … it will give people that certainty and clarity around their tax scales,” Mr Chalmers said.

“This is only one aspect. This is only one sliver of economic policy.”

Meanwhile, a senior economist has hit out at Labor for dropping its opposition to the policy.

The Australian Institute’s Matt Grudnoff said it was a shame politics got in the way of good policy.

“The stage 3 income tax cuts are bad policy. The benefits of the stage 3 income tax cuts overwhelmingly flow to Australia’s highest income earners,” he said.

“With inequality in Australia only getting worse, we need a debate and better policies about taxing wealth properly and reducing inequality rather than exacerbating it.”

Conversely, Finance Minister Simon Birmingham said the backflip would do little to change voters‘ minds about Labor.

“I don’t think Labor’s announcement today will change much with the Australian people because Labor have come so half-heartedly, so begrudgingly to this decision that it shows that deep down they don’t really believe it themselves,” he said.