PRIME Minister Julia Gillard will use today's carbon scheme launch to unveil sweeping reform of personal income tax, tripling the tax-free threshold to let most Australians keep at least the first $18,000 they earn each year.

The Sunday Age can also reveal that fuel for heavy vehicles outside the mining sector will not be subject to the carbon tax, helping to explain why Treasury modelling tips food prices to rise by just 80¢ a week. A loaf of bread and instant coffee would jump by 1¢ and a six-pack of beer by 2¢.

Prime Minister Julia Gillard will today launch the government's long-awaited carbon scheme. Credit:Andrew Meares

Overall the scheme is expected to cost consumers a little under $10 a week or $520 a year - including $3.30 a week more for electricity and $1.50 for gas. Around 5.7 million households are to be fully compensated with a mix of tax cuts and a boost to family payments.

Labor wants to reframe the debate on the carbon tax by entwining it with personal income tax reform based on key elements of the blueprint authored by former Treasury secretary Ken Henry last year.