Federal Election: Coalition MPs back dumping promised tax cuts as inflation fight firms as top priority

Coalition MPs support Peter Dutton walking back promised tax cuts for higher-income earners as fighting inflation firms as the Opposition’s main election priority.

Mr Dutton on Wednesday couldn’t commit to offering new tax cuts, saying the economic conditions at the time would determine if it would be included in Coalition’s election pitch.

The comments confirm a shift from the Opposition, which in February promised to take a tax package to the next election after Labor redesigned the Morrison-era stage three tax cuts in favour of middle-to-low-income earners.

Labor’s tax cuts – which the Coalition eventually supported in Parliament – halved the promised relief for people on $200,000 from $9000 to $4500.

Shadow treasurer Angus Taylor had signalled the Coalition’s election package would be “in keeping” with the original tax cuts, suggesting the Opposition was open to reinstating at least some of the benefits stripped from higher-income earners after Labor’s backflip.

Mr Dutton said the Coalition supported lower taxes but the potential for more cuts would “largely be dependent” on the economic climate.

“I think it just depends on where the numbers are as we go into the election and how much money is available and how we prioritise our spending and how we do it in a way which is targeting inflation, so that interest rates can come down,” Mr Dutton said.

Mr Dutton accused the Federal Government of engaging in a “spending spree” that was keeping inflation, and interest rates, higher for longer.

The comments confirm the Coalition won’t use big spending promises to woo voters at the next Federal poll, due in May.

“I think the priority, to be honest, is to get inflation down, to get interest rates down and to support jobs in the economy, because I think we’re coming into a difficult period,” Mr Dutton said.

The Nightly spoke to several Coalition MPs who would support shelving the promised tax cuts ahead of the election.

“If we want to maintain fiscal credibility we have to respond to the conditions of the day” Liberal MP Garth Hamilton, who is deputy chair of the House economics committee, said.

Another Liberal MP said the community was far more attuned to the need to curb government spending to avoid fuelling inflation than it was just six months ago.

One Liberal was confident a future Coalition Government would pursue further tax cuts once inflation had cooled because it was “in our DNA”.

Treasurer Jim Chalmers said the Opposition was “hopelessly divided” on income tax.

“We’ve made our policy clear. We legislated it, we explained why we came to that view,” he said.

“We’re very pleased and proud that those tax cuts are rolling out in our community right now because people desperately need them.

“That is put at risk by the fact that Peter Dutton and his colleagues are casting an element of uncertainty over those tax cuts.”