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Labor has bet a blockbuster $17.1bn in tax cuts to deliver it a second term at the upcoming election, as Jim Chalmers handed down his fourth budget jammed with cost-of-living support for middle Australia.
In the shadow of the US president Donald Trump’s determination to overturn a global trading order that has seen Australians enjoy an era of prosperity, the treasurer claimed his budget was aimed at making the economy more resilient in a more uncertain world.
The surprise announcement that all taxpayers will be as much as $268 better off from mid-2026 and $538 from the following financial year comes after the treasurer had hosed down expectations of any major new programs in Tuesday night’s budget.
As the Coalition immediately vowed to oppose the measure, Chalmers said the two-step tax cut was designed to deliver the biggest relative benefits to workers on lower incomes
.The policy will reduce the lowest tax rate from 16% to 15% from the middle of next year, and then again to 14% from mid-2027. The tax rates apply to annual earnings between $18,201 and $45,000
After redesigning the Coalition’s stage-three tax cuts towards lower and middle-income households, Chalmers said “we’re topping up the tax cuts because it’s part of our efforts to make sure people earn more and keep more of what they earn”.
“That’s our very deliberate effort to recognise that people are still under cost-of-living pressures,”
He told Guardian Australia.“You get a lot of economic bang for buck by providing those tax cuts to everyone, but with a disproportionate benefit for people entering the labour market.”
