The Treasurer Scott Morrison has confirmed there will be no tax cuts for wage earners in this year’s budget.
The Budget will now be held on May 3, giving Prime Minister Malcolm Turnbull time to clear the decks for a double-dissolution election on July 2, if the Senate fails to pass legislation reinstating the building industry watchdog.
Mr Morrison, who had hinted at this last week, said the government’s decision not to lift the GST had forced it to assess where it could best change the system. And that meant the budget would aim to stimulate growth with company tax cuts.
“There isn’t a lot of room to move in this budget. When we decided we weren’t going to do the GST, that meant the opportunity for major changes to income tax were largely removed,” he told radio 2GB.
“You can’t pay for something with nothing. When that decision was taken, well, you had to recalibrate.
“With the limited room to move, we have to focus on the things that are best going to drive economic growth, because that’s what is going to shore up peoples’ jobs.”
Mr Morrison also confirmed there would be no attempt to freeze the 2 per cent deficit levy on high income earners which expires in July 2017.
The deficit ley, which had been imposed to assuage anger over the 2014 budget, helped fund the National Disability Insurance Scheme combined with an increase to the Medicare levy.
However, that measure attracted loud protests by pushing Australia’s top marginal tax rate to almost 50 per cent.
While the Greens have called for the levy to be made permanent, Mr Morrison said that would not happen.
“It was introduced as a temporary tax increase,” he said.
“That’s what the Labor Party also voted for. That’s what was made law and we’re not changing that law. It will run out at the end of next year.”