Mathias Cormann has said the government will raise revenue in a “better way” without increasing the overall tax take, amid reports it is planning to copy Labor’s proposal to increase taxes on cigarettes.
The finance minister made the comments on Thursday on ABC’s 7.30. He said the government’s focus was on “controlling expenditure and … improving the way that we raise the necessary revenue for government”.
On Friday the treasurer, Scott Morrison, said: “The government is not looking to increase the tax burden on the economy.”
Cormann said: “We are focused on making our tax system more growth-friendly, which will involve obviously a look at how we can raise the necessary revenue for government in a way that is better.”
He said the objective of improving the tax system meant raising “necessary revenue for government in a better, more efficient, less distorting way in the economy so we can generate stronger growth”.
On Thursday, in response to a warning from Moody’s that spending cuts alone would not return the budget to surplus, Morrison said: “Of course there will be revenue measures in the budget. What we’re saying is where we will apply those revenue measures is to reducing the tax burden in other parts of the economy, and wherever possible, to continue to drive down the deficit.”
Cormann’s comments about driving growth through less distortive taxation and Morrison’s suggestions the tax burden in some parts of the economy will be reduced add further indications to strong signals the government is favouring a cut in the company tax rate.
Morrison said revenue would rise to the long-run average of 24.1% and is forecast to rise over the next three or four years.
Cormann declined to rule out increasing cigarette taxes, a revenue measure proposed by Labor which reports suggest the government will include in the 3 May budget.
He attacked Labor for proposing “to raise more than $100bn in new taxes to fund more spending and even that $100bn in new taxes is unlikely to be enough to fund all their spending promises”.
Speaking on Lateline on Thursday, the shadow treasurer, Chris Bowen, committed Labor to a fiscal rule of “more savings than spending over the decade”.
“Our fiscal rule is very clear and we’ve led the way with $100bn – more than $100bn worth of improvements to the budget bottom line.”
Bowen would not commit to restoring the $80bn cut from projected health and education spending in the 2014 budget. He said Labor had promised $37bn for schools but further updates on the total level of health and education spending would be released after the budget.
He said the government “after having complained about our policy [on cigarette taxes] has now today pretty clearly indicated they’ll be in the same space on election day”.
On Friday Morrison said Bowen was “caught out [on] the fact that they’re not increasing taxes to reduce the deficit, they’re increasing taxes to throw even more taxpayers money around”.
“So it’s not about reducing the deficit, it’s not about improving the sustainability of Australia’s fiscal position. They’re doing it because they don’t know how to constrain their own spending.”
Morrison said: “The government is not looking to increase the tax burden on the economy.” He did not rule out raising cigarette taxes and said any budget measure would be revealed on 3 May.
He called on Bowen to release Labor’s costings for its proposed $100bn of savings.
On Friday the industry and innovation minister, Christopher Pyne, added to speculation the government was poised to back higher cigarette taxes. He told the Nine Network “one of the most significant ways of reduce health costs is reduce the number of smokers”.
