The Albanese government's backflip on the stage three tax cuts is an exercise in wedge politics which the opposition has, with some justification, described as class warfare.
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It would appear that under pressure from some ministers and many backbenchers the Prime Minister has flicked the switch back to "fighting Tories" mode under the pretense of helping the battlers.
It is a significant return to form for a party which won office, at least in part, by saying it had learnt from Bill Shorten's mistakes in 2016.
Mr Shorten, for those who may have forgotten, had promised to scrap dividend imputation for self-funded retirees, as well as making the Coalition's temporary deficit repair levy a fixture of the taxation system, if elected.
That would have set the effective marginal tax rate for high income earners at 49 per cent in perpetuity. Under the changes now being flagged by the government it will remain at 47 per cent (including the Medicare levy).
Fast forward to 2024 and its a bad case of deja vu all over again. Anthony Albanese and his Treasurer, Dr Chalmers, appear to be pilfering from the rich in the hope of seducing the poor.
The government's plan to keep the marginal tax rate for incomes between $120,000 and $180,000 at 37 per cent, rather than dropping it to the legislated 30 per cent, will "save" $1.5 billion a year.
Mr Albanese and his advisers obviously believe that by redistributing this money further down the income ladder they can buy the support of the battlers at the expense of cheesing off the more affluent who would be less likely to vote Labor in any case.
Populism lives. Or, as de Tocqueville once observed: "the ... republic will endure until the day Congress discovers it can bribe the public with the public's money". Machiavelli would be proud.
While it is widely accepted the government should have stepped in to provide direct relief to low-income earners battling to keep food on the table, petrol in the tank and roofs over their heads at least a year ago, the measures expected to be announced by the PM at his National Press Club address on Thursday aren't likely to add up to more than two-fifths of sod all.
Giving "everybody" a tax cut won't do much for people earning less than $45,000 a year; the previous cut off point for the stage three cuts. There are two reasons for this. The first is that even when the legislation is amended the cuts won't take effect until the start of July, six months from now. The second is that people earning less than $48,000 per annum are paying very little tax in any case.
That is because the first tranche of the tax reforms legislated by the Morrison government almost five years ago - which applied to low-income earners - were rolled out in the same year.
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Mr Albanese's "big ticket" items apparently include increasing the low income tax offset by $150 a year from $700 to $850 ($2.88 a week) and raising the tax free threshold from $18,200 a year to $19,500.
Given the lowest marginal tax rate ($18,200 to $45,000) is 19 per cent that would deliver another $247 a year for a total of $397 a year ($7.63 a week). Talk about a sugar hit. The battlers will be turning cartwheels in the supermarket aisles. While the government is attempting to justify its breach of trust on the grounds of "equity" this is actually anything but.
The top income tax threshold of $180,000 has not risen for 15 years. If it had been indexed it would now be sitting at $250,000 - not the $200,000 legislated in 2019 to take effect this year.
Given the PM is weak when it comes to "retail politics" this volte-face looks likely to do Labor far more harm than good.
