Prime Minister Tony Abbott and Finance Minister Mathias Cormann say deficit levy is ’appropriately targeted measure’

A DEBT levy in the form of tax increases is now certain in Tuesday’s Budget, and according to Tony Abbott “we are all in it together”.

“We are not doing this for fun,” says Finance Minister Mathias Cormann. Picture by Gary Ramage

A DEFICIT levy in the form of tax increases is now certain in Tuesday’s Budget in defiance of strong warnings from business and Liberal MPs.

The Government today is calling the tax jumps “appropriately targeted measures in the tax systems” aimed at higher income earners as part of “an immediate special effort” to start “repairing” the Budget left by six years of Labor administrations.

“What we would ask is people across Australia to trust us,” Finance Minister Mathias Cormann said ahead of inevitable accusations that the Government has gone back on promises made to voters in the 2013 election campaign.

Senator Cormann said: “We are not doing this for fun.”

There is speculation the measures could take extra tax from those earning $150,000 a year and more. The Government also is understood to have considered hitting the 400,000 taxpayers on $180,000 a year and above.

Prime Minister Tony Abbott says “we are all in it together”. Photo by Stefan Postles/Getty Images

Prime Minister Tony Abbott today emerged from frantic last-minute Budget preparations in cabinet to say “we are all in it together”, a reference to hits on welfare and family benefits and a tax jump for higher income earners.

“I’m going to be able to look people in the eye on Tuesday night and Wednesday morning and beyond and say, ‘We are all in this together. We are all doing our bit. We are all playing a part in the fiscal repair job Australia needs if we are going to build our prosperity, build our strength as a nation in the years and decades to come’,” he said.

Senator Cormann also left cabinet to say the Coalition doesn’t like tax increases. But he left the overwhelming impression that is what will happen on Tuesday.

He said he understood why there was a “level of concern” about the prospects for tax rises. However, the only guarantee he could give was that taxes in the Budget would be “the lowest possible”, indicating cuts were a long way off.

“Coalition members and senators don’t like tax increases. This Government, this cabinet, doesn’t like tax increases,” he told reporters in Canberra.

“We want to see lower taxes. And in the Budget we will be delivering the lowest possible taxes given the challenge that we are facing, given the Budget situation that Labor has left behind.”

Opposition Leader Bill Shorten says Australians are “appalled, horrified and shocked” at the tax proposed by Tony Abbott. Picture by Tom Huntley

Opposition Leader Bill Shorten accused the Government of “broken promises and twisted priorities” and of ignoring “the voices of the millions of Australians who get up everyday”.

“Tony Abbott, Australians do not want your tax increases full stop,” Mr Shorten said. “Tony Abbott, Australians do not want your broken promises. They know that before the last election you staked your reputation on being a Prime Minister who wouldn’t break promises. You made a virtue of this.

“Now for the last two weeks, Australians, be they people who go to work, people who go to the doctor, pensioners are appalled and horrified and shocked at this discussion of slugging ordinary Australians to pay for Tony Abbott’s Budget.”

Originally published as Prime Minister Tony Abbott and Finance Minister Mathias Cormann say deficit levy is ’appropriately targeted measure’