Carbon tax relief to end at $150,000

JULIA Gillard has indicated that most families on incomes above $150,000 will miss out on compensation under the proposed carbon tax plan to be unveiled next month.

This comes as Tony Abbott today will promise tax cuts from a Coalition government when it scraps the carbon tax and accompanying compensation measures.

Ms Gillard has strongly defended the $150,000 figure, saying people earning that amount are not rich but ''they're a lot better off than the vast majority of Australian families''. She pointed out that the average household income was $68,000 and only one in 10 households earned more than $150,000.

Prime Minister Julia Gillard has indicated carbon tax compensation will be cut-off at $150,000. Photo: Alex Ellinghausen

The Prime Minister, in comments to The Saturday Age, confirmed the compensation package would include income tax cuts and family payment increases, as well as increases in pensions and allowances.

''By providing tax cuts and increases in payments this way, we can take account of people's different family circumstances - whether they're on high or low incomes, whether they're bringing up kids or not,'' Ms Gillard said.

Mr Abbott's pledge of tax cuts is to counter the government's potentially damaging refrain that he will ''rip away'' people's compensation when he scraps the carbon tax.

By getting the promise out before the package is released, he aims to limit the government's ability to run a fear campaign on what people would lose under the Coalition. The opposition has said people won't need compensation if the carbon tax is gone.

In a speech to the Liberal federal council today, the Opposition Leader will say: ''At the next election, the Coalition will deliver tax cuts that are not just compensation. It will be a tax cut without a carbon tax. Our tax cuts will recognise the cost of living pressures that are hitting families and small business hard.

''Our tax cuts will be designed to restore people's hope, to reward harder work with higher pay.''

Mr Abbott will say voters will understand that a tax reduction to compensate for a tax increase, as planned by the government, ''is not a cut but a con''. He will say his tax cuts will be funded from ''prudent economies in government spending'' and ''policy-driven improvements in the productivity of our economy''.

Under the government's compensation package, the income threshold of $150,000 is not a precise cut-off point, but families earning more than that should not expect help for higher power bills and other costs flowing from a carbon tax.

The opposition criticised the budget for freezing the $150,000 income threshold on primary earners for eligibility for family tax benefit B, but this week allowed the legislation through Parliament.

Ms Gillard said that ''there are people in our community doing it much tougher'' than those on $150,000 and ''most of my attention is on looking after people who really need that extra bit of help''.

Pre-empting criticism about not providing compensation for those further up the income scale, Ms Gillard said: ''I want to make sure that ordinary working families can make a difference and help tackle climate change without having to make financial sacrifices along the way.

''It's people on lower incomes who spend the highest proportion of their income on energy. They are the people who most need financial help … That's why our assistance will be focused on pensioners, low-income earners and middle-income earners.''

Mr Abbott will say that his Coalition government would ''build on the Howard legacy of reducing personal income taxes for everyone and especially delivering a fair go for middle-income earners with children''.

Source http://www.smh.com.au