Federal Labor dumps negative gearing policy backs tax cuts

Federal Labor has formally dumped its contentious negative gearing policy and has officially dropped its opposition to the federal government’s stage three tax cuts for high income earners.

Anthony Albanese’s shadow cabinet has agreed to the position which is likely to be controversial within the party’s membership base. Mr Albanese and his shadow ministers will ask Labor’s caucus to endorse the position on Monday morning.

Federal Labor will dump several contentious economic policies at a meeting later on Monday.Credit:Alex Ellinghausen

Labor went to both the 2016 and 2019 elections promising to halve the 50 per cent capital gains tax deduction and limit negative gearing to new properties only.

Three shadow cabinet sources, who spoke on the condition on anonymity, told this masthead the opposition was clearing the decks ahead of a looming federal election, which must be held before the end of May next year.

The housing policy was among many highlighted in a review of the ALP election loss as one which exposed the opposition to a Coalition attack that would risk the budget, the economy and the jobs of economically insecure, low-income workers.

Shadow treasurer Jim Chalmers will also ask caucus to go to the next election promising not to repeal stage three income tax cuts if it forms government, heading off a likely Coalition campaign to portray it as high taxing and anti-aspirational.

The tax cuts have already been legislated to begin on July 1, 2024, and will cost an estimated $137 billion between then and the end of the decade. They will abolish the 37 per cent tax rate and apply a 30 per cent rate to all income between $45,000 and $200,000.

Labor supported the legislation for the tax cuts after the last election but, it argued, only because they were tied to the stage two tax cuts for low- and middle-income earners which began on July 1 last year.

More to come.

Rob Harris is the national affairs editor for The Sydney Morning Herald and The Age, based at Parliament House in Canberra

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