(Transcript from World News Australia Radio)
Federal Treasurer Joe Hockey has announced the government will abandon a range of Labor's proposed tax changes.
These include the tax increase on superannuation pensions and changes to the Fringe Benefits Tax on cars.
Amanda Cavill reports.
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Mr Hockey and Assistant Treasurer Arthur Sinodinos have been reviewing a host of unlegislated tax proposals that have been stuck in the federal government's pending tray and dating back to 2001.
There are 96 in total, including four that involve the carbon and mining tax packages that the Coalition government has vowed to scrap.
Of the remaining 92, the government only plans to definitely go ahead with 18.
The rest will be the subject of consultation about whether to cancel or keep them.
Mr Hockey says going ahead with 18 tax measures will guarantee $11 billion in revenue over four years from 2014.
But he says the scrapping of the other taxes will put the budget $2.4 billion further dollars in the red in the short term.
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"We are drawing a line in the sand. You cannot go forward with a complicated unresolved taxation system if you want to give business and consumers the best hope that what they work hard to achieve will be achieved. So we are resolving this emphatically which allows us to deliver the Mid Year Economic and Fiscal Outlook. The MYEFO document we release before Christmas will show the Australian people the problem that we have inherited."
As promised, the Coalition is dropping Labor's proposed Fringe Benefits Tax changes for the car industry.
It is also not going ahead with changes to the higher taxation rates apply to superannuation earnings over $100,000 in any one year.
However Mr Hockey says the government will still go ahead with scrapping the Low Income Superannuation Contribution which was to be funded by the carbon tax.
The government also plans to scrap the cap on self-education expenses announced in the May budget.
"Of the 174,000 taxpayers affected by Labor's cap on self education 81 per cent earn less than $80,000 a year. They are the people who are trying to invest in their own education to get ahead. It was flawed policy."
However, the government will keep the increase in tobacco excise due to come into effect on December 1.
Tobacco excise will increase by 60 per cent over four years, returning $5.2 billion in revenue.
The government will also keep Labor's plan to link excise increases to wages growth rather than lower Consumer Price Index movements.
And it will reinstate taxation measures that give companies preferential tax treatment when they expand overseas and are forced to compete with state-owned enterprises.
The government says it's not keen about proceeding with a further 64 measures.
Assistant Treasurer Arthur Sinodinos says he'll be holding further consultations on those measures before making a decision on their fate.
"We've been prepared to take a bit of a hit to the revenue in order to have a process which gives people more time on certain measures which have been outstanding for a period to give us one last input, if you like, on why a particular measure should proceed. We're asking people to provide reasons why they think something should proceed and we'll use that process to make final decisions."
Mr Sinodinos says the Tax Office will refund any taxpayer who has already complied with any of the Labor tax proposals now being scrapped.
The federal opposition is questioning why the Coalition is foregoing tax revenue when it had declared says the budget was in an emergency situatioin.
Former Trade Minister Richard Marles has told Sky News the government must explain exactly what's going on with the economy.
"I think there is a lot of explaining that this government now has to do about why it is sending the government and the country more into debt and creating more deficit in circumstances where they've described as this country facing an economic emergency. Yet we've seen none of that in terms of the behaviour of this government since they came to power in September of this year."
Mr Marles says the government's priorities are all wrong.
He says it's planning to give tax breaks to 16,000 people with superannuation balances of more than $2million, while reimposing super tax for millions of low- and middle-income earners.
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