Treasurer Joe Hockey insists the government can afford to deliver tax cuts while keeping good on its promise to bring the budget back to surplus in five years.
Mr Hockey has promised to take personal income tax cuts to the next election. He says the government can fill the $25 billion revenue hole tax cuts would create, insisting many difficult decisions to get the budget back on track have already passed parliament
‘The budget deficit is coming down and when I release the final budget numbers for the last 12 months, people will see actually we beat expectations,” Mr Hockey told the Nine Network.
Mr Hockey says tax cuts are needed to address the growing problem of bracket creep, which pushes workers into higher tax brackets merely though wage inflation.
‘Unless Australia has tax cuts that provide an incentive for people to work more, put in greater effort, get greater reward, then we will start to fall behind the rest of the world,’ he said.
Mr Hockey on Monday left the door open to funding the tax cuts by broadening the base of the GST to include health.
Opposition health spokeswoman Catherine King says the tax burden would fall disproportionately on the sickest Australians, costing patients $3 billion a year.
‘It would be terribly regressive health policy to see the sickest and the poorest basically having to pay more and being punished for being sick,’ she told ABC Radio on Tuesday.
Greens treasury spokesman Adam Bandt said the mooted tax cuts could mean the budget never returns to surplus.
‘The government says it will get back to an early surplus, keep unfair tax breaks for the wealthy and reduce income taxes all at the same time,’ he said.
‘It will have to cut services, lift other taxes or find a magic pudding.’
