If you want tax cuts, find ways to raise more revenue: Chalmers

Treasurer Jim Chalmers has opened the government’s economic roundtable to a tax grand bargain that would offset cuts with extra revenue while signalling to the states that any plan to increase the rate or breadth of the GST is unlikely to win favour.

As details of a post-election Treasury Department briefing to Chalmers suggested it believes the government needs higher taxes and less spending to repair the budget, the treasurer said next month’s three-day roundtable would also focus on ways to make the tax system simpler for both workers and businesses.

Treasurer Jim Chalmers says he wants tax proposals that either leave the budget no worse off or lift overall revenue.Credit: AAP

But the Coalition accused Chalmers and Prime Minister Anthony Albanese of lying to the voting public, saying the Treasury briefing revealed the depths of the problem facing the budget.

All areas of tax are expected to be part of the discussion during August’s economic roundtable at which up to 30 people from government, unions, business and community organisations will work through proposals to increase the rate at which the economy can grow and lift living standards.

Treasury’s incoming government brief, parts of which were released to the ABC under freedom of information laws, showed the department argued that “improvements to the budget will need to come from economic growth, additional revenue and spending reductions”.

It also noted that “tax should be raised as part of broader tax reform”.

Chalmers, who heads to South Africa this week for a G20 meeting of treasurers and finance ministers, said it was clear more had to be done to make the budget – forecast to show a $42.1 billion deficit this financial year – sustainable.

He said he was looking for a broad array of proposals that either left the budget no worse off or improved the bottom line.

“Now, when you ask me about tax reform more broadly, what we have asked people to come to the roundtable with are ideas which are broadly budget-neutral or better,” he said.

“People will come with all kinds of suggestions about how changing one tax over here will make it possible to cut taxes over there. That is, in lots of ways, the essence of the tax reform that a lot of people who will come to the roundtable are grappling with.”

This masthead on Monday revealed the push from businesses for the tax system to be simplified, with ongoing concerns in areas from research and development incentives to the way GST is applied to some foods but not others.

Chalmers, who promised a $1000 standard deduction for individual taxpayers during the election campaign, said simplification of the tax system had to be on the government’s agenda.

“When it comes more broadly to complexity and the tax system, of course, we are interested in ways to simplify the tax system,” he said.

“When we speak with tax experts and people that have a view about tax reform, they’re interested in efficiency and equity and simplicity, and other design principles like that. So ideally, people will come [to the roundtable] with views about how we simplify the tax system.”

While open to tax simplification, Chalmers drew the line at changing the 10 per cent GST, which some states have suggested they may be open to.

EVs accounted for just under 8 per cent of new cars sold this year so far, affecting one of the federal government’s important sources of tax revenue.Credit: Wolter Peeters

But the treasurer gave his strongest indication yet that he is developing a road user charge, which would apply to drivers of electric vehicles who do not pay the 50.8¢-a-litre fuel excise.

EVs comprised 7.7 per cent of all new vehicle sales in the first half of this year, but their share of the market must grow rapidly for Australia to meet its commitment to net zero emissions by 2050.

The Commonwealth collected $15.7 billion in net fuel excise in 2023-24, with warnings this could disappear as petrol-driven cars are replaced by EVs.

“This is not a new development, and our interest in seeing what can be done over the medium and long-term is not a revelation either,” Chalmers said.

Shadow treasurer Ted O’Brien seized on the FOI response, saying it had inadvertently revealed the government would have to raise more taxes to pay for its spending.

He said the government’s planned changes to superannuation taxes on accounts holding more than $3 million, which is expected to be put to parliament soon after it resumes sitting next week, would be just the start of a broader taxing agenda.

“Anyone who thinks Labor’s super tax on unrealised gains is the end of their campaign to tax family savings is kidding themselves. Since coming to government, Labor has racked up an extraordinary $144 billion in new spending decisions – now they’re coming after your nest egg to pay for it,” he said.

“Australians deserve to know what’s next. Will Labor extend these taxes to family homes? Family trusts? Small businesses?”

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