Malcolm Turnbull, in a interview on Sky News, has stated that the states must live within their means and spend money more efficiently, rather than increasing tax.

Malcolm Turnbull on Sky: States must live within their means

THE intense income tax debate, which came and went within just a few days last week, was all a bluff, Treasurer Scott Morrison said today.

And it was the majority of state and territory leaders who squibbed it in this game of fiscal chicken.

Prime Minister Malcolm Turnbull had offered premiers and chief ministers at Friday’s Council of Australian Government talks a slice of federal income tax, and the ability to raise their own income tax to spend as they wished.

They wanted more funding, but rejected the proposal to levy their own income tax.

“The Prime Minister called that bluff last Friday. That issue has now been determined and so we go forward,” Mr Morrison told ABC radio.

He elaborated later on Canberra’s 2CC that the premiers constantly demanded, “Give us more money, give us more money, give us more money”.

“And when you say, ‘If you want more money why don’t you raise the tax?’, well they run a mile,” the Treasurer said.

“When push comes to shove they said, ‘We’re happy for you to raise taxes’.

“Now, we’re not going to raise taxes, they say they don’t want to raise taxes. So we agree on one thing.”

Mr Morrison indicated the coming election campaign would see the government making a virtue of offering few goodies to voters.

The theme will be “live within your means”, while Labor will be accused of basing its policy on higher taxes.

“Every time you see (Opposition Leader) Bill Shorten’s lips moving over the next three months — or however long it is to the next election — there is one consequence of it: Your taxes will go up. Or the deficit will get bigger,” Mr Morrison said.

However, the federal government still has to negotiate education spending with the states, and any agreement has been postponed to early next year — after the election.

Mr Morrison said the income tax proposal was now “off the table”.

“But it was a threshold issue and a threshold issue where the states decided that they didn’t want to increase income taxes. We certainly don’t want to increase income taxes,” he said.

“The question put to states was what levels of sovereignty and autonomy they wanted to have over the revenue side of their budgets.

“The Prime Minister called that bluff last Friday. That issue has now been determined and so we go forward.”