Gillard to axe breaks on tax

PRIME Minister Julia Gillard will commit her government to cuts to spending in the coming year, putting in doubt concessions and tax breaks enjoyed by wealthier Australians.

In her first big speech for 2013, Ms Gillard will spruik ''structural'' cuts to the National Press Club on Wednesday, suggesting that they are necessary to pay for the education and disability funding reforms likely to be the centrepiece of its re-election campaign.

The cuts, according to excerpts from speech notes released to the media, will be ''tough and necessary'' in a new ''low-revenue environment'' - a reflection on flat company tax receipts after the mining boom peaked in recent years.

Years of accumulated concessions for upper middle-class voters, handed out by successive governments and continued under Labor, are under threat.

This could include changes to some family payments, reductions to generous concessional tax arrangements for self-funded superannuation contributions, a further tightening of the private health insurance rebate based on income, a reduction of the current 50 per cent capital gains tax discount, and a clamp-down on loopholes such as the exemption from fringe benefits tax for employees of churches and charities.

The potentially risky strategy is consistent with Ms Gillard's conviction that Labor's best hopes for victory in 2013 lie with reconnecting to its traditional heartland, even if that means alienating comparatively well-off families.

With the government still reeling from its forced Christmas backdown on delivering a budget surplus, Ms Gillard's language also reveals a preference to front-load the election year with bad news for voters.

That would clear the second half of the year for a focus on its multibillion-dollar National Disability Insurance Scheme and Gonski education reforms.

''In the lead-up to and in the budget we will announce substantial new structural savings and make room for key Labor priorities,'' she will say.

While no specific programs have been publicly earmarked for a cut, the Prime Minister wants voters to understand the government's logic for making painful savings.

In support of the strategy she will list other unpopular cuts. ''The dependent spouse tax offset, the tax breaks for golden handshakes, tax concessions on super for high-income earners, the millionaires' dental scheme and fringe benefits loopholes for executives living away from home … all gone.''

The story Gillard to axe breaks on tax first appeared on The Sydney Morning Herald.

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