Middle-income earners could get a tax cut before the next election, Malcolm Turnbull has hinted.
The Prime Minister foreshadowed the measure during a speech to the Business Council of Australia last night.
"I am actively working with the Treasurer and my Cabinet colleagues to ease the burden on middle-income Australians, while also meeting our commitment to return the budget to surplus," Mr Turnbull said.
People earning $87,000 or less pay up to 32.5 per cent in tax.
Australians in the next bracket — up to $180,000 — pay up to 37 per cent.
"Our marginal tax rates are high, bracket creep is a constant challenge that needs to be addressed," he said.
"Higher taxes penalise people who are trying to get ahead.
"When you reward hard work and enterprise, you encourage hard work and enterprise — it's pretty simple."
Pressed for details on the income tax cuts this morning, the Government was tight-lipped, but said it would be the main focus leading up to the next budget.
"In terms of the detail of the tax rates, that will be something that we will be able to announce in the lead-up to the budget," senior Government minister Julie Bishop said.
Opposition Leader Bill Shorten criticised the announcement as a promise thrown out by the Prime Minister "to keep the wolves from the door".
"It's like free beer tomorrow, isn't it? I mean, this bloke just says whatever comes into his head to keep the wolves from the door," Mr Shorten said.
"What Malcolm does is on the week before a Newspoll, he comes up with a thought bubble, he says 'income tax cuts, that's a good idea', but he's got no detail on it."
Turnbull maintains corporate tax must be reduced
Last night, Mr Turnbull said the Government had lifted the second-highest tax bracket in 2016, helping "about half a million Australians" avoid so-called bracket creep.
He also said the Government had addressed cost-of-living pressures through changes to child care and private health insurance.
Speaking to corporate leaders, Mr Turnbull confirmed the Government would pursue tax cuts for all businesses.
"If we don't reduce our corporate rate to 25 per cent as planned … the only advanced nations that will exceed Australia's tax rate are Japan and Malta," he said.
Parliament has only passed tax relief for firms with annual turnovers of up to $50 million.