Tax cuts and scrapping the Clean Energy Supplement
Selectivity: Government ignores $8.4b in carbon price compensation
In the 2016 budget the government announced that it would close carbon tax compensation to new recipients of government welfare benefits. This will have the effect of reducing the amount paid to welfare recipients. This will save the government $1.3 billion over the forward estimates.
The clean energy supplement was not the only part of the compensation package for the carbon price. The other main feature of was income tax cuts, which the government is not proposing to cut.
These tax cuts are estimated to be costing the budget $8.4 billion over the forward estimates. This is considerably larger than the expected savings of $1.3 billion associated with scrapping the clean energy supplement for new welfare recipients.
This briefing note examines the costs and savings associated with both measures.