Federal Treasurer Scott Morrison has warned Australians not to expect “mammoth” tax cuts in next week’s budget.
Mr Morrison is expected to announce a plan to reduce income taxes when he steps up to the despatch box on Tuesday night, but the timing and scope of the tax relief has not yet been revealed.
The Government has made it clear that Australians earning less than $87,000 are likely to get a tax cut first, potentially as soon as July this year.
Mr Morrison confirmed this morning that low and middle-income earners would be the first priority — but he was quick to douse any expectations of a big windfall.
“I’m not going to pretend these are going to be mammoth tax cuts or anything like that,” Mr Morrison told Channel Nine.
“They will be what’s affordable, they will be real, and they will be within what the budget can afford.”
Mr Morrison is also expected to promise the Government will cut both tax rates and tax thresholds for wealthier Australians, but only over the longer term.
On Sky News, Finance Minister Mathias Cormann indicated Australians in the higher tax brackets would have to wait for a tax cut.
“What I can say to you is that we will be prioritising low and middle-income earners in the first instance, but there will be a phased approach moving forward,” Senator Cormann said.
“We do recognise that high-income earners are carrying a very significant tax burden in our economy today.”
The Government’s coffers have been swelled by a pick-up in revenue, particularly in company tax.
That has fuelled speculation the Coalition will unveil several big ticket spending promises in an effort to win over voters.
Deputy Prime Minister Michael McCormack turbo-charged that speculation when he compared Mr Morrison to Santa Claus and predicted he would hand down “goodies” in the budget.
But Senator Cormann insisted the Coalition would match any spending promises with spending cuts.
“To the extent we’ve had to make decisions to increase spending on higher priority areas, as we have done in previous budgets, we have more than paid for that with spending reductions in other parts of the budget,” he said.
“So policy decisions on the spending side of the budget have not added to the budget bottom line.”