Finance Minister Simon Birmingham has ruled out raising taxes to improve the budget bottom line, saying it would be counterproductive to growing the economy.
Senator Birmingham and Treasurer Josh Frydenberg will hand down the mid-year budget review on December 16.
Mr Frydenberg has already indicated he will be upgrading growth forecasts for next year, as the economy rebounds strongly from the contraction seen in the September quarter due to COVID-19 related lockdowns.
“Our low tax approach is not only fuelling Australia’s successful economic recovery, but it is also leading to improvements to our budget position,” Senator Birmingham told an Australian Financial Review conference on Monday.
“With more Australians in work and less on welfare we can make significant indents in that budget position quite quickly.”
The government’s financial statement for October released on Monday shows the underlying budget deficit for the 2021/22 financial year running at $43.9 billion, $7.8 billion smaller than expected after four months.
Receipts were $20.2 billion higher than expected at that stage of the year and were only partly offset by payments being $12.4 billion above forecast.
The deficit for the full financial year was forecast at $106.6 billion in the May budget.
Senator Birmingham said this was part of a trend that saw the final budget outcome for the 2020/21 financial year – released in September – being $80 billion smaller than forecast in October 2020. It was also a $27 billion improvement on expectations in the May budget.
He said the Morrison government was backing lower taxes as an essential way to drive confidence and investment.
“We certainly won’t be looking at ways to increase taxes on businesses or households in the future, as we see that as being very much a counterproductive thing that will only dampen confidence and hurt growth,” Senator Birmingham said.