Just minutes after the 2025 federal budget was unveiled, a sharp political disagreement emerged over its central proposal on tax cuts. According to The Guardian, the Coalition swiftly rejected the government’s plan, setting the stage for a tense pre-election debate.
While details of the tax policy have sparked early reactions, both sides appear poised to use the issue as a campaign flashpoint. The full implications of the proposal—and the opposition’s response—remain to be seen in the weeks ahead.
Labor’s Two-Step Tax Reform Unveiled in Budget
The centrepiece of Treasurer Jim Chalmers’ fourth federal budget is a two-phase personal income tax cut. Taxpayers will receive a $268 cut in 2026, followed by $538 annually from 2027.
The proposal lowers the minimum income tax rate from 16% to 15% starting mid-2026, and then to 14% by mid-2027, targeting income brackets between $18,201 and $45,000. Chalmers described the measure as a “top up” to the already-legislated stage-three tax reforms.
That’s our very deliberate effort to recognise that people are still under cost-of-living pressures – Chalmers told Guardian Australia.
Coalition Labels the Policy an Election Ploy
The announcement was met with immediate rejection from Shadow Treasurer Angus Taylor, who responded less than 20 minutes after the budget speech. He strongly criticized the scope and timing of the reform.
Seventy cents a day, in a year’s time, is not going to help address the financial stress Australian families are currently under. This is an election bribe by a weak prime minister – Taylor said.
Calling the reform “a budget for the next five weeks, not the next five years,” he argued that it prioritizes short-term electoral gains over long-term economic planning.
This is a budget for an election, not one for our country’s future prosperity – he said in a statement.
Broader Critique of Labor’s Economic Record
Taylor widened his criticism beyond tax policy to condemn Labor’s economic performance since taking office.
At a time when living standards have suffered the biggest collapse on record and when the security environment is the most dangerous since the second world war, Labor’s budget has failed to deal with the economic and national security challenges our country faces – he said.
He added :
Labor’s cruel hoax tax changes in 2026-27 fail to restore the standard of living you have lost after three years of Labor. Tonight’s budget confirms you are poorer after three years of the Albanese Labor government.
Uncertainty Over Coalition’s Own Tax Policy
When asked during an ABC interview whether the Coalition would offer its own personal income tax cuts, Taylor replied :
That’s not what I said. I said we will not be supporting what Labor has proposed in this budget and that’s what we’re responding to tonight.
No alternative tax cuts plan was presented, nor did Taylor commit to a specific tax policy. He instead emphasized the opposition’s broader economic positioning.
The Coalition will show leadership and take the necessary decisions to get our economy and our country back on track – he stated.
Focus On National Security and Essential Services
Beyond tax cuts, Taylor reiterated the Coalition’s broader priorities for economic stability, fiscal responsibility, and increased defense spending as key pillars of its national strategy.
A Coalition government will always better manage the economy so we can pay for essential services and keep our country safe and secure – he said.
And a Coalition government will increase Defence spending to keep our country safe and secure in an uncertain world. Australians deserve better than this weak and incompetent Labor government. Ask yourself: are you better off than you were three years ago? The answer is no. Australians cannot afford another three years of this Labor government.
