Boost to family tax benefits axed

Aussie families will no longer receive the promised boost to family tax benefits. Picture: Thinkstock

THE Government is abandoning its promised boost to family tax benefits because the mining tax meant to fund it has been a dud.

Finance Minister Penny Wong today confirmed the planned $600-a-year top-up pledged in the last Budget would be scrapped in the Budget next week.

"We are not in a position to proceed with the boost to family tax benefits as a result of the revenue challenge that the Government is facing and the nation is facing," Senator Wong told Sky News.

"So this is a difficult decision but a responsible decision given what is happening to revenue."

The backdown will not affect Family Tax Benefit A payments currently received by households. But it means the Government will not have to find about $1.8 billion extra in the Budget.

The abandonment of the promise is a severe embarrassment for the Government. It will be seen as both a breach of faith with voters, and a sign of incompetent economic management.

The Mineral Resources Rental Tax was to have raised about $1 billion this financial year from the profits of big coal and iron ore miners.

However, the decline in ore prices and some legitimate accountancy practices by the miners has meant this target will not be met.

And Government tax revenue generally has been falling so it can't find the funding elsewhere.

"The impact in the current financial year, between last year’s budget and this year’s budget looks to be in the order of $17 billion," the Senator said today.

"So that is a very significant revenue shortfall."

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