TODAY'S Federal Budget would be in surplus by at least $25 billion, with an estimated $40 billion in extra revenue, if income tax cuts introduced between 2005-2008 had not been put into place.

Independent think tank The Australia Institute has released modelling that shows the state of the federal finances would be in much better shape if governments had thought more about the long-term structure of the budget.

It shows income tax cuts, the majority of which were delivered in the last few years of the Howard/Costello government during the pre-GFC mining boom, were "having a big influence on the present federal government's budget".

"Had the income tax cuts not been made, the current budget would not be in deficit and we would be having a very different discussion about funding priorities," the report says.

Using NATSEM modelling the report showed last year's budget would have been $38 billion better off. Over the past seven years $169 billion would have been saved.

The Australia Institute's senior economist, Matt Grudnoff, told News Limited that today's Budget would be at least in surplus of around $25 billion had the tax cuts not come into play.

"The estimated deficit for this year is between $5 and $15 billion and the expected income would have been around $40 billion, so there would have been a surplus of at least $25 billion," Mr Grudnoff said.

In the 2004-05 Budget, the Howard/Costello government included income tax cuts for all Australians. This was followed in the 2006-07 Budget with a promise of further cuts. In the 2008-09 Budget, the Rudd/Swan government delivered income tax cuts.

The modelling shows most the benefits of the tax cuts from 2005 to 2008 have flowed through to higher income earners.

"Of the $38 billion in tax cuts in 2011-12, the top 10 per cent of income earners gained $16 billion," the report said.

A spokesman for former prime minister John Howard yesterday defended his government's economic record.

"Mr Howard is immensely proud that his government paid off $96 billion of debt, delivered 10 budget surpluses, established the future fund and delivered across-the-board tax cuts," the spokesman said.

"In addition, government spending as a proportion of GDP fell during the Howard years."

Treasurer Wayne Swan's office declined to comment on the modelling.