National

Budget brawl escalates over rival tax cut proposals

May 17, 2026

Politicians — The federal government has continued back its budget tax reforms despite opposition criticism. -AAP Image

A row has broken out over the cost of cutting taxes for millions of Australians as Labor and the opposition try to sell rival economic plans to voters.

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After a week dominated by the state of the nation's finances, Prime Minister Anthony Albanese accused the opposition of failing to properly price its plan to bake in tax cuts to every federal budget.

Opposition Leader Angus Taylor wants to index tax brackets in line with inflation, effectively giving most Australians a tax cut each year from 2028/29, while Labor has announced a $250 rebate each year for all working Australians.

But Mr Albanese said the hit to the budget would be bigger than the opposition predicted.

"They came out with a costing of $22 billion ... we know it's at least $35 billion," he told reporters in Hobart.

"There were no facts there at all."

Mr Taylor said he stood by the four-year costing, which would be offset by cuts to government programs, including funds for social and affordable housing that the coalition believes are wasteful.

The opposition leader argued leaving current settings in place would amount to a tax hike due to bracket creep as people were pushed into higher tiers through wage inflation.

"This betrays the fact that the government plans to raise income tax rates to the tune of $35 billion... the faster inflation goes up, the more they hike them," he told Sky News.

An opinion poll published on Sunday suggested the government's plan to wind back negative gearing and the capital gains tax discount had been poorly received and was widely regarded among voters as a broken election promise.

According to Freshwater research published by News Corp, 44 per cent of voters think the budget will leave their household worse off while 13 per cent think it will improve their circumstances.

More than 80 per cent of those surveyed thought Labor had broken its promise to leave property tax concessions unchanged.

Asked whether he was disappointed by the survey results, Treasurer Jim Chalmers said he wasn't expecting support for the government to increase due to its budget reforms.

"I'd be more surprised if there was a bounce," he said, pointing to the oil crisis and a "predictable scare campaign" as factors driving down support for the government.

"We're not doing this to help our primary vote, we're doing this to help more people into housing."

Startups could still be carved out from changes to capital gains tax due to fears the new inflation-linked method of calculating the charge could drive investment away from up-and-coming businesses.

"There are particular issues when it comes to the cost-based calculation in startups, particularly in tech and when it comes to (venture capital)," Dr Chalmers said.

"We recognise that there are specific issues here and so it's not unusual for there to be consultation on implementation after a big policy change is announced."

But shadow treasurer Tim Wilson said the policy change would "kneecap" startups and make Australia less productive.

"The government is now coming along and saying that they want to take a 47 per cent stake in these small businesses," he said.

"The prime minister is like that person in a group assignment that never seems to do anything but at the end of the day wants to take the same grade when they haven't done half the work."