Battle of the election ‘sugar hits’: Labor and Coalition announce tax plans at duelling campaign launches

Australians would get an automatic $1,000 tax deduction on their annual returns without having to produce receipts or paperwork, in an election promise made by Anthony Albanese at Labor’s campaign launch.

The new, permanent tax deduction was announced by the Labor leader just an hour after Peter Dutton promised that a Coalition government would offer up to $1,200 in a one-off tax refund for low- and middle-income earners, as well as allow interest payments on home mortgages to be tax deductible for first home buyers.

Both major parties held their campaign launches on Sunday – with Labor’s beginning minutes after the Coalition’s ended – and both using the event to unveil centrepiece housing promises. Labor and the Coalition are locked in an election spend-a-thon, with billions of new promises on cost-of-living measures and tax sweeteners – with each accusing the other of offering “sugar hit” policies to win votes.

At Labor’s campaign launch in Perth, Albanese said the new “instant tax deduction” would allow all workers to claim $1,000 on work expenses against their tax liability. It would more than triple the existing benchmark of $300 without receipts.

The prime minister said “millions” of people were missing out on deductions due to the complexity of the tax system, and therefore having to “pay more tax than they should”. People who have more than $1,000 in deductions can continue to claim their expenses as normal but Albanese said about 5.7 million people would be better off under the changes. He pledged nobody would be worse off.

“No paperwork, no box of receipts, no scrolling through your online banking – just tick the box and your return is ready,” Albanese told the 500-strong crowd at Perth’s convention centre.

“It takes away the hassle of tracking your expenses, especially if you work from home. And it gives you back more of your own money, faster.”

“Under Labor you earn more, keep more of what you earn – and get more back at tax time.”

Labor suggested the average amount of benefit would be $205; those earning between $45,000 and $135,000 could benefit by up to $320.

Labor had already shared details of its other announcement of the day , $10bn to build 100,000 new properties for first home buyers and expanding the first home guarantee program to all first home buyers, allowing them to obtain a mortgage with as little as a 5% deposit.

At the Coalition’s campaign launch, in western Sydney, Dutton pledged his own new tax relief for voters – a surprise move, after previously calling Labor’s tax cuts revealed in the federal budget an “election bribe” and a “sugar hit”, and indicating that his party could not match the tax changes.

The Liberal leader’s speech detailed what he called a cost-of-living tax offset, a $10bn tax cut to give low and middle income earners up to $1,200 in tax relief in the upcoming financial year. It closely mirrored the time-limited low and middle income tax offset from the previous Morrison Coalition government.

Those earning between $48,000 and $104,000 would benefit from the full offset of $1,200, which the opposition claimed would benefit about 85% of taxpayers.

In addition, the Coalition’s new first home buyer mortgage deductibility scheme would allow interest fees on mortgages to be offset against tax, for up to five years. Eligibility would be limited to new builds and places of principal residence, and interest could only be deducted on the first $650,000 of the loan. Single people earning up to $175,000 and joint applicants with a combined income of $250,000 would be covered.

The exact benefit would be based on the person or couple’s incomes and tax liability but the Coalition suggested an individual in the 37% tax bracket could receive a maximum deduction of $14,500 a year.

Dutton said the “temporary and targeted” cost-of-living relief would help Australians sooner than Labor’s plan. Similarly to the Coalition’s plan to temporarily halve the fuel excise to 25.4 cents, it would run for just one year.

Labor MPs, in opposing the fuel excise cut, have said they preferred permanent relief over temporary changes.

In a campaign rally speech in western Sydney, Dutton labelled Labor’s $17bn in progressive tax cuts “insulting”.

The treasurer, Jim Chalmers, said the Coalition was “making this up as they go, because in their usual shambolic way”, noting the Liberals had opposed Labor’s smaller tax cuts.

“This is a desperate and reckless distraction … If they cared about the cost of living they’d support our tax cuts for every taxpayer,” he told the ABC.