Treasurer 'not considering' changes to negative gearing

Australians have been assured there will be no more tax tinkering following a controversial rework of the stage three cuts.

With the Labor government gearing up to take its rejigged tax package on a regional roadshow, the federal treasurer has been under pressure to confirm there are no further surprises on revenue collection in the pipeline.

Jim Chalmers said there was no plan to change negative gearing.

“We’ve made it really clear that’s not something that we have considered or are considering,” Dr Chalmers told reporters in Canberra on Monday.

The government had found other ways to take pressure off the strained housing market, he said, including encouraging more build-to-rent properties.

Yet he acknowledged a “need to do better” when pushed on the effectiveness of the existing tax settings for those looking to get into the housing market for the first time.

Liberal frontbencher Dan Tehan wanted Labor to categorically rule out any changes to negative gearing as he criticised the government for breaking faith with the public after going to the election with a different position on stage three tax cuts.

Opposition frontbencher Dan Tehan criticised the government for changing its position on tax cuts. (Mick Tsikas/AAP PHOTOS)

“When you say your word is your bond and you go back on that and you won’t even apologise for it, the Australian people are going to view that very dimly,” he told Sky News.

Under the tweaked stage three scheme, tax relief has been redistributed so benefits are skewed toward lower and middle income earners while those on the highest incomes will receive less than under the original design.

The changes will need to be legislated, with the prime minister hopeful members of the Greens and independents will back policy changes when parliament resumes in February.

Tasmanian senator Jacqui Lambie will support Labor’s new cuts in their current form, with the Greens set to push for greater support for lower-income earners and a higher tax-free threshold.

The tax cuts are due to start flowing through from July 1, amounting to extra money in pockets at a time when inflation is still well above the Reserve Bank’s two-three per cent target range.

Proposed changes to tax cuts depend on the support of Senate crossbenchers. (Alan Porritt/AAP PHOTOS)

Commonwealth Bank head of Australian economics Gareth Aird said the revised tax cuts had shifted the distribution of the relief, with the size of the package largely unchanged.

He said there was an argument that a greater share of the income tax cuts would be spent now that more was flowing to lower and middle income earners.

“But the overall changes are not enough to shift the dial for economic growth, the labour market or inflation,” Mr Aird wrote in a note.

The economist said the tax cuts were not of a sufficient size to fend off interest rate cuts later in the year

“The RBA board is unlikely to wait to assess the impact of tax cuts on the economy if the already‑released data suggests the case for maintaining a restrictive monetary policy setting is no longer necessary or appropriate.”

He said the tax cuts risked a shorter easing cycle into 2025, rather than a delay to cuts starting in September based on CBA’s best guess.