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The Finance Minister did not ask civil servants to overhaul stage three tax cuts, but the Treasury proposed the idea, a Cost of Living Inquiry heard.
Senior civil servants at the Treasury and Treasury were grilled on Monday over the Albanian government’s controversial timetable for changes to legislation for the third phase of tax cuts.
While Labor’s internal polling shows most Australians are happy with the revised plan, which cuts taxes for lower- and middle-income Australians at the expense of higher earners, Anthony Albanese is criticized for his “Broken promises” and bore the brunt of the backlash. Complete delivery of original plan.
The Prime Minister insisted the changes reflected economic circumstances and were the best way to deliver cost-of-living relief without increasing inflation, as recommended by the Treasury.
Questioned by opposition finance spokesperson Jane Hume, civil servants backed the claims.
Diane Brown, Treasury’s undersecretary for taxation, said Jim Chalmers first asked Secretary Steven Kennedy to consider further cost-of-living measures in mid-December.
Ms Brown said there may not have been a written request, but the two men did meet.
After receiving the request on Dec. 11, staff spent the summer considering options. Ms Brown said Dr Kennedy “has been considering how to provide cost of living relief in a way that does not increase inflationary pressures”.
“He (Dr Kennedy) was interested in this and mentioned to us around the same time that he wanted the department to consider whether changes to personal income tax rates and thresholds could provide broad relief for all taxpayers in a way that There will be no inflation,” she said.
“We were concerned that stent creep would still return, so the range of return stent creep was about the same.”
The department submitted their study to the Finance Minister on Saturday, January 20, the weekend before Cabinet considers and approves the changes on Tuesday, January 23.
Mr. Albanese announced the changes a day later.
Senator Hume told Ms Brown the process had been rushed, Mr Albanese had lied to Australians and may have involved the department in the process.
Ms Brown said that was not the case.
Just days before the Treasury began considering the cost of living, and Senator Hume noted that Mr Albanese maintained that the government’s position on stage three was “unchanged”, Ms Brown said it was not the government’s idea to change tax cuts.
She said the department was prepared not to listen to the government’s advice if it decided to do so.
“The department believes the best approach is to change individual rates and thresholds,” Ms Brown said.
“We believe this is the best way to reduce returns and provide broad cost-of-living relief without increasing inflationary pressures and labor supply benefits.”
Asked why Cabinet had not received proposals 10 days in advance – as explained in the Cabinet Handbook – Ms Brown said the rules did not apply to stage three changes as they were considered short-notice submissions.
Senator Hume noted that the section of the manual explaining the known risks of such referrals states: “This increases the risk that Cabinet’s decisions will lead to unforeseen and unintended consequences. It undermines Cabinet’s ability to review it from a whole-of-government perspective,” And ultimately undermines the cabinet system itself.”
Ms Brown said this style of questioning was more suitable for a ministerial or Prime Minister and Cabinet department.
She said Phase 3 was considered in previous budgets, but changes to the tax cuts were not discussed until this summer.
Ms Brown said the changes would have “overall no tax impact” but Senator Hume urged her to raise an extra $28 billion in taxes over the next 10 years.
Officials say that over a decade, “the bottom decile will be better off in the medium term”.
While 84 per cent of Australian taxpayers would be better off under Labor’s plan, this would fall to 70 per cent within a decade.
Senator Hume asked whether the Treasury was providing advice or preparations for the government on changes to negative gearing, capital gains tax or other housing-based tax policies. Ms Brown said the department was “always looking at the operation of the tax system”.
“But there is no instruction … to change any of these arrangements,” Ms Brown said.
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