Stage-three tax cut changes will have minimal effect on inflation, economists predict

Banks say tax tweaks approved by Anthony Albanese’s cabinet may slow pace of RBA interest rate cuts and further reforms are needed to fill budget shortfalls

• Stage-three tax cuts: cabinet approves new cost-of-living relief for workers on less than $150,000
• Follow our Australia news live blog for latest updates
• Get our morning and afternoon news emails, free app or daily news podcast

The Albanese government’s changes to the stage-three tax cuts won’t reignite inflation, although they may slow the pace of Reserve Bank interest rate cuts and more reforms are needed to close future budget gaps, economists say.

Cabinet has approved a revision to the cuts, legislated in 2019, that extends tax relief to those earning less than $45,000 a year to be paid for by reducing the benefit to higher-income earners, with full details still be formally released.