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CANBERRA, Feb 14 AAP

February 14 2013, 08:27AM

Federal Treasurer Wayne Swan has refused to rule out income tax increases as a way of offsetting revenue shortfalls in his budget.

Mr Swan, speaking to ABC Radio on Thursday, was asked four times whether he would increase income taxes in the May 14 budget as claimed by the opposition.

"I'll leave the speculation for everybody else," he said.

"There'll be hundreds, hundreds of stories between now and budget day and most of those stories will be wrong."

When asked whether he could guarantee Australians there would be no increase to income taxes, the treasurer said: "I don't in the lead-up to any budget ... go into that rule-in-rule out routine.

Mr Swan already has conceded a forecast budget surplus is unlikely on the back of revenue writedowns, including a big shortfall in the new mining tax.

Some analysts estimate the deficit for 2012/13 will be between $12-15 billion, leaving the government little room to fund big-spending initiatives such as a national disability insurance scheme and measures recommended by the Gonski school funding review.

Mr Swan said all the government's profit-based taxes in the second half of last year and extending through to the early part of this year had taken a "very substantial hit".

"But that doesn't mean to say we should shut up shop and not invest in education and long-term infrastructure," he said.

Shadow treasurer Joe Hockey says the coalition is not in the business of increasing personal income taxes.

"We don't do that," he told reporters in Canberra, adding the coalition delivered income tax cuts.

"It is the Labor Party that increase personal income tax, full stop."

It was time for the government to stop the "massive" undermining of business and consumer confidence that should be turned into economic activity.

"But at the end of the day everyone is just wondering how much extra tax the government is going to take from their pocket," Mr Hockey said.