In a bold move to woo middle Australia ahead of the federal election, Opposition Leader Peter Dutton has unveiled a targeted tax relief plan that would provide a one-off income tax offset of up to $1,200 for more than 10 million Australians.
Announced ahead of the Liberal Party’s official campaign launch in Sydney, the proposed “Cost of Living Tax Offset” would benefit taxpayers earning up to $144,000, with the full $1,200 going to those in the $48,000 to $104,000 income bracket. The Coalition estimates that around 85% of all taxpayers will benefit, with half receiving the maximum offset.
The measure is projected to cost $10 billion and would be claimed at tax time in the 2025–26 financial year, providing relief more than a year from now. Nevertheless, the Coalition argues it is a necessary step to ease mounting household financial pressure.
“Australians are hurting,” Dutton said on Sunday. “Grocery bills are up, rents are rising, and mortgage repayments are punishing families. A Coalition government will ease the pressure with this tax offset and by cutting fuel prices.”
The fuel excise relief – another key pledge from the Opposition – proposes to halve the fuel tax, saving a typical two-car household up to $1,500 annually. Together with the tax offset, Dutton says the average family could see $2,400 in relief.
Dutton’s announcement marks a return to Coalition-era tax policy reminiscent of the Morrison Government’s Low and Middle Income Tax Offset (LMITO), which Labor discontinued after taking office.
The announcement surprised some observers, particularly given the Coalition’s earlier stance that additional tax cuts might be fiscally irresponsible in the current economic climate. The government’s own stage three tax changes, legislated in February, are set to kick in from mid-2024 and will cost $17 billion over the forward estimates.
Criticising the government’s plan, Dutton said Labor’s cuts amounted to “just 70 cents a day” and were a “slap in the face to hard working Australians.”
Shadow Treasurer Angus Taylor reinforced the party line, calling the offset a responsible and targeted approach to economic management. “Labor’s big spending agenda is fuelling inflation. Our plan is to ease cost-of-living pressures, reward hard work, and rebuild the economy,” Taylor said.
Labor has yet to formally respond to the Coalition’s new tax policy but is expected to challenge the Opposition’s costings and accuse it of policy backflipping.
The tax offset joins a growing list of Coalition promises aimed at tackling cost-of-living pressures as the federal election campaign intensifies. The pitch signals the Opposition’s strategy to reclaim economic credibility and win over voters disillusioned by persistent inflation and interest rate hikes.
With both major parties now offering tax relief, cost-of-living pressures are shaping up to be the defining issue of the 2025 election. As Australians weigh competing promises, the battle for middle Australia is heating up – and Peter Dutton is making his case loud and clear.
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