Jim Chalmers rules out fuel excise extension and downplays hopes for tax relief in ‘most responsible’ budget yet | Australian politics
Jim Chalmers has warned there will be no more room for cost of living support in his fifth and “most responsible” budget; He ruled out an immediate extension of the 26-cent cut to the fuel excise tax and downplayed hopes of additional tax cuts for workers.
The treasurer also said Australian voters would forgive Labor for breaking its pre-election promise to leave negative gearing rules for landowners untouched; This will be part of a package that will also reduce capital gains tax relief in the name of intergenerational fairness.
As the central bank’s monetary policy board begins its two-day meeting on Tuesday, which most economists predict will result in a third successive interest rate hike, Chalmers promised that the budget will “play a beneficial rather than a detrimental role in the fight against inflation” within a week.
“Australians are already paying a very heavy price for this war in the Middle East. Before the war, there were some inflationary pressures in our economy. The war increased these inflationary pressures,” he said on Monday.
“That’s one of the reasons why the budget is so responsible and accountable. We’ll save more than we spend in the budget.”
Stating that the end of the US-Israeli war against Iran and the resulting global shock in the supply of other critical commodities such as oil and fertilizer is not on the horizon, Chalmers said that the government faces “a series of unexpected situations” if the economy deteriorates faster than expected.
But he said next Tuesday’s budget will not extend the temporary halving of the federal fuel tax and that oil prices have fallen “significantly” from their March highs.
“As for the fuel tax cut, that will be in the budget by the end of June. Frankly, if the economy deteriorates faster and worse than we expect in the budget, we will of course evaluate our options at that point.”
Labor is set to announce changes to CGT relief and negative gearing rules as part of reforms that Chalmers says are aimed at addressing public concerns that younger generations are being left worse off under current tax arrangements.
Anthony Albanese has publicly ruled out a change to negative gearing, leaving the government open to accusations that it has broken its election promise to leave the popular tax cut for homeowners untouched.
Chalmers cited Labor’s “necessary and warranted steps” to direct more of the Coalition’s phase three tax cuts to lower and middle-class workers, although he vowed not to touch them.
“Our responsibility is to adjust the budget to the circumstances, to understand and respond to the real pressures people are facing now and also intergenerationally.
“You build trust by making the right decisions for the right reasons and being open and explaining why that is the case if you come to a different view over time.”
The treasurer also said controversial changes to investor taxes would not be used to provide extra tax relief for Australian workers.
“We already have tax cuts,” he said when asked about the possibility of further income tax cuts.
In its last pre-budget election, Labor promised to cut the lowest income tax rate from 16 per cent to 15 per cent from mid-2026, then to 14 per cent from mid-2027; These small reductions would provide a maximum tax reduction of $268 in the next fiscal year and $538 in the next fiscal year.
“The bulk of the budget will be more than the $2.5 billion we spent on the fuel tax cut, and the standard deduction will also come,” he said.
“I’ve seen some speculation about tax cuts. I want to remind everyone that this is a government cutting taxes, cutting income taxes. We did it once, we’re going to do it twice more, and the standard deduction will also provide some additional tax relief. That’s already in the system.”
