Opposition Leader Angus Taylor has announced a plan to automatically index income tax brackets to inflation, aiming to end bracket creep. The proposal, revealed in his budget reply speech, would save the typical taxpayer $250 in its first year and about $1,000 annually from the fourth year.
Bracket creep occurs when inflation pushes workers into higher tax brackets, increasing their tax burden without a real increase in purchasing power. The Coalition's 'Tax Back Guarantee' would index the two lowest brackets from 2028-29, with the top two brackets following from 2031-32.
The first four years of the lower bracket cuts would cost about $22.5 billion, which the Coalition plans to fully offset with measures to be announced before the 2028 election. The plan is seen as a bold economic policy to regain voter support after two election losses.
In contrast, Labor's budget includes a $250 Working Australian Tax Offset (WATO) from July 2028, funded by changes to negative gearing, capital gains tax, and discretionary trusts. Treasurer Jim Chalmers described the WATO as a 'down payment' for workers.
Taylor also outlined plans to tie immigration to housing, cap net overseas migration to one person per new house built, and block non-citizens from accessing payments like the pension and NDIS. He committed to a $5 billion housing infrastructure fund to accelerate 400,000 new homes.
