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Senator David Pocock weighs in on Labor pension changes


Senate King David Pocock has called for a review of the controversial “Stage 3” tax cuts after Labor announced it would cut tax breaks for pensions.

The Albanian government has rekindled the debate on tax reform after announcing last week that it planned to tax income over $3 million in super accounts at 30 percent from July 1, 2025, instead of 15 percent, an estimated 2 billion dollars saved each year.

Labor says the policy will make super fairer, improve the budget and affect 0.5 per cent of the population or about 88,000 people.

The coalition has vowed to vote against the policy, meaning Labor would need support from the Greens and at least two crossbenchers to get the legislation through the upper house.

Senator Pocock, the ACT-based independent whose vote the government will likely need, said Monday he broadly supported the “modest” changes.

But he said it was time for a broader conversation about Social Security benefits and other tax breaks.

“If you really want to start addressing some of the root causes of the housing crisis and look at things like discounting capital gains or negative gearing … good luck — the big parties just don’t seem to want to have a sensible debate,” he told ABC Radio.

With the government’s pension changes fueling speculation Labor may have other tax breaks in its sights, Senator Pocock said the Stage 3 cuts “need to be reviewed”.

The cuts, which take effect from 2024, have been the source of one of the most contentious tax reform debates in recent years.

After the first two tranches provided targeted tax relief to low and middle income taxpayers, the third tranche of cuts passed by the Morrison government with Labor backing will scrap the 37 per cent marginal tax bracket and raise the 32.5 per cent marginal tax rate percent down to 30 percent. cent from 2024.

It also raises the 45 percent marginal tax rate threshold, so people who earn between $45,000 and $200,000 pay the same 30 percent tax rate.

Treasury costs of the policy released late last year revealed that the blow to the budget had inflated by $11 billion from $243 billion over a decade to $254 billion.

The Labor government has so far suppressed pressure to go back on its election pledge to keep Stage 3 cuts, with critics – including some within Labor – claiming they will exacerbate inequality at a time when the Australian economy is at its worst has difficulty.

Senator Pocock suggested that the money would be better spent elsewhere.

“We have been told to be very careful about raising JobSeeker’s rate as that could be inflationary, but those $250bn in tax cuts will largely go to the wealthier Australians (who) are exempt in some way of being inflationary. I just don’t get it,” he said.

“You know, if we want to end the creep for people on the low end, there are better ways to do that than the Stage 3 tax cuts.”

But Tony Burke, Secretary of Workplace Relations, ruled out a policy change — at least for now.

“Our position has not changed,” he told ABC Radio on Monday.

“But our determination to do something about the cost of living, I think, is visible to people.”

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.