By Adam Gartrell
The Turnbull government is sending more mixed signals on tax, refusing to publicly confirm reports the budget will include middle class income tax cuts that appeared to be off the table just a few weeks ago.
The government is reportedly planning to increase income tax thresholds to prevent so-called bracket creep, with Treasurer Scott Morrison to target people earning between $37,000 and $180,000 a year for relief.
Federal Treasurer Scott Morrison at the Australian Christian Lobby Conference.Credit: James Brickwood
The changes would keep an estimated 300,000 workers out of higher tax brackets, according to the News Corp reports.
However, Mr Morrison refused to confirm the speculation on Saturday.
Malcolm Turnbull has ruled out negative gearing changes in the budget on May 3.Credit: Alex Ellinghausen
"You have to wait until May 3," he told reporters in Sydney, referring to the budget date.
"It's important that we back in the Australians who are out there earning in our economy, the ones running businesses - because that's where the growth comes from, that's where the jobs come from."
Mr Morrison has often talked about the need to address bracket creep but the government had appeared in recent weeks to be walking away from any significant tax relief in this budget.
The treasurer said in February that any tax relief would be "modest" once a rise in the GST to 15 per cent was had been dropped from consideration. Since then the government has been playing down expectations.
"There isn't a lot of room to move in this budget," Mr Morrison said last month. "You can't pay for something with nothing."
Opposition Leader Bill Shorten said it seemed like another "pre-budget game" from Prime Minister Malcolm Turnbull.
"The only thing that I'm sure about in this budget is that the wealthiest Australians and the largest multinationals will get tax cuts from Mr Turnbull," he told reporters in Sydney.
The government is planning to cut the company tax rate from 30 per cent to 28.5 per cent in the budget in a move that will be pitched as necessary to spark more investment. It is also sticking to its promise to remove the 2 per cent "temporary deficit levy" imposed on high-income earners by the Abbott government in 2014.
Labor has pledged to keep the levy in place.
The budget - which will be delivered just two months before the potentially close-run July 2 election - is also expected to include a rise in tobacco excise and superannuation tax concession changes.
The government will be hoping that any income tax relief in the budget will buy it goodwill just days before it heads into the official election campaign.
Shadow treasurer Chris Bowen said Mr Morrison had overtaken former treasurer Joe Hockey as the "king of the thought bubbles" and called on him to immediately clear things up.
"How will the government pay for income tax cuts?" Mr Bowen said. "By cutting schools and hospitals even more?
"Will it be through other tax increases, if so, what and how much?"