Treasurer Scott Morrison all but rules out income tax cuts in budget

Federal Treasurer Scott Morrison has all but ruled out income tax cuts in this year's budget, despite indicating for months that he was aiming to deliver some tax relief.

Key points:

  • Prospect of income tax cuts in May budget all but diminished
  • Treasurer warns Australians could soon pay higher taxes because of inflation (or "bracket creep")
  • Tax reform will be delivered, over time, by cutting spending
  • Government still seriously considering handing down budget early

The ABC has also confirmed the Government is still seriously considering handing down the budget a week early to help clear the path for a double dissolution election in July.

Mr Morrison told a business summit in Melbourne that the Government could not afford to provide cuts to both company and personal taxes in the budget, given the state of the federal finances, and argued this was something that could be achieved "within budget after budget after budget".

The Government has been working on a tax reform package for months, but since ruling out an increase in the Goods and Services Tax (GST), its options have been rapidly narrowing.

Mr Morrison said tax reform would now be delivered primarily through cutting spending, and in the case of income tax cuts, faster economic growth.

"The best way to drive income tax cuts ultimately, is off growth," he said. "So our focus is very much on, let's drive growth."

Promises of 'modest tax relief'

Mr Morrison has consistently made the case for cutting income tax, warning hundreds of thousands of Australians would soon be paying higher taxes simply because of inflation.

"The goal is to ensure that those 300,000 — that the average wage earner in this country doesn't move into the second highest tax bracket," he told Melbourne's 3AW radio in February.

During that interview, he said he was working to ensure that "in the Budget we are able to deliver some modest tax relief to people so they do not go into these higher tax brackets".

The timing of the budget still remains unclear.

The ABC has confirmed the Government has sought advice and is contemplating bringing back the House of Representatives, without the Senate, a week early and delivering the budget on May 3.

It is understood no decision has yet been made, but changing the date of the budget is a live option.

One of the arguments in favour of bringing forward the budget is to give Opposition Leader Bill Shorten a right of reply, should the Prime Minister call a double dissolution election.

Source: ABC News

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