Treasurer Joe Hockey has promised tax cuts but hasn't said where the money will come from. Credit:Andrew Meares In May, the Treasurer's top economic bureaucrat John Fraser warned bracket creep would collect $25 billion in extra revenue from workers over four years. Mr Hockey said in his speech that without personal income tax cuts, about 300,000 Australians would move into second highest tax bracket, for people earning more than $80,000 a year, over the next two years. The second federal budget forecast that much of the heavy lifting in reducing the federal deficit will be performed by bracket creep over the next four years. After his speech, Mr Hockey would not say whether the government's plan to cut income taxes would fully offset the looming tax hikes that would flow from bracket creep.

"You are asking me to describe in detail what the tax cuts will look like at the next election, or tax changes will look like more generally. I'm not going to do that, we are part of the way through the conversation with the Australia people," he told Sky News. "This is not either or, it's not a case of either getting back to surplus or having tax cuts and a bigger deficit, that's just not right." Mr Hockey said, however, that"you can actually have strategically targeted taxation change that helps to grow the economy and in turn helps to deliver you better revenues that compensates you for the losses of those tax changes". Cutting taxes to promote economic and grow tax revenue is known as trickle-down economics and is closely associated with the economic approach of former United States president Ronald Reagan. Asked how the government would pay for its tax reform package, Mr Hockey said the government had already got most of its savings through the Senate but added: "I'm not saying that's the end of it", a clear signal further cuts will be considered.

"We will have make appropriate trade-offs, there will be some tax cuts in key areas, there will be some tax changes in other areas, the mix between the states and the commonwealth will be a little different as well." Prime Minister Tony Abbott said the Coalition had "already taken $45 million of savings out of the forward estimates ... but we're always looking for sensible savings and we're always looking to cut taxes

further". After the speech, ​CPA Australia Alex Malley lashed the Treasurer's speech for being "long on rhetoric and short on substance". "Repeating the contents of the March discussion paper is not breaking news and does nothing to advance the imperative for tax reform," he said. "Holding out the prospect of tax cuts leading up to an election should be viewed for what it is, but certainly not holistic tax reform. The Treasurer appears to be caught in a cycle of re-stating the problems rather than re-thinking the solutions. No substance and no strategy means no jobs."

Labor leader Bill Shorten also mocked the prospect of tax cuts, declaring that "when Joe Hockey talks about a tax cut you have to start putting your hand over your wallet". He highlighted attempts to introduce a GP tax, the re-indexation of petrol excise and a temporary increase in the top income tax rate and said Mr Hockey "can't explain how we would pay for these income tax cuts". "It's somewhat suspicious that you've got a Canning by-election and there is poor old Joe Hockey out there again huffing and puffing about tax cuts." The Treasurer dismissed any link with the Canning by-election, stating "there is no correlation, I'll tell you why, I've been talking about tax reform for months now, and years in fact". Following us on Twitter