Australians won't spend an extra cent on the Medicare levy as the Turnbull government promises to scrap a proposed $8 billion increase it says is no longer needed to fund the National Disability Insurance Scheme.
The increase, a signature measure of the 2017 federal budget, was to cover the costs of the NDIS.
Treasurer Scott Morrison will release better-than-expected tax receipts on Thursday to show the extra 0.5 per cent hike is no longer needed.
"We are now in a position to give our guarantee to Australians living with a disability and their families and carers that all planned expenditure on the NDIS will be able to be met in this year's budget and beyond without any longer having to increase the Medicare levy," he will tell business economists on Thursday.
"The reason we proposed to increase the Medicare levy was only to fully fund the gap left behind by Labor on the NDIS.
"We no longer believe we need to do this."
The treasurer will blame Labor for leaving a $57 billion gap in NDIS funding when it left office.
Mr Morrison 's speech points to tax receipts up until February running $4.8 billion higher than estimated in December, thanks to company profits, a temporary commodities boost and a jobs boom.
"This decision will withdraw the Medicare levy increase and associated revenue from the forward estimates and ensure that all Australians who pay the Medicare levy will now not have to pay more," his speech states.
Mr Morrison said the government had banked on the generosity of Australian to help fund the NDIS when it put forward the proposal.
"We did not put forward this proposal in last year's budget lightly, as we knew it would cost Australians more, but we had faith in the big-heartedness of Australians. It was about helping your mates," he will say.
For him, "tax can go too far" and this would've been proof.
But negotiations over the government's bill have stalled in the Senate.
Labor had proposed to restrict the 0.5 per cent Medicare levy increase to those earning more than $87,000.
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