As part of its assistance to households when the carbon tax was introduced, the federal government tripled the tax-free threshold to $18,200 in 2012. This was due to rise to $19,400 in 2015. Greg Combet: confirmed tax cuts linked to the carbon tax will be dropped. Credit:Andrew Meares Mr Combet told reporters in Sydney that next week's budget would revise the carbon price forecast - initially put at $29 a tonne for 2015-16 when the local emissions trading scheme is linked to the European Emissions Trading Scheme - down. He said that international markets had ''severely impacted'' the carbon price. ''This means it is a lower cost to our economy to cut pollution,'' he said.

''Because there will be no additional anticipated increase in costs to households in 2015-16, with a lower carbon price forecast, the budget will defer an anticipated further round of additional related tax cuts.'' The Coalition's Greg Hunt... the carbon tax is in "chaos". Mr Combet said that when the carbon price rose again in the future, the tax cuts would be implemented. ''This is a sensible approach to this particular issue,'' he said. Mr Combet said that there would be more offsetting savings "from a number of areas" in the budget, to make sure that the carbon tax package remained "broadly budget neutral".

This comes as the government signalled on Tuesday that the budget faces a revenue shortfall of $17 billion in 2012-13 and that it would not proceed with a promised increase to family benefit payments, due to start on July 1. Opposition climate action spokesman Greg Hunt seized on the news on Wednesday, saying the carbon tax was in ''chaos''. He told Fairfax Media's Breaking Politics program said he was not surprised the government was clawing back "phantom revenue". "This is part of a pattern of overstating the revenue, spending the revenue before it's been received, and then discovering afterwards that there is no revenue," Mr Hunt said. "Australians are going to pay the price of carbon chaos."

Mr Combet said that when the carbon tax was introduced it was accompanied by a "very significant round" of tax cuts, increases in family tax benefits and the pension. "All of those measures implemented on the 1st of July last year will remain and they will be permanent," he said. The government provided pensioners and other income support recipients with a one-off lump sum "Clean Energy Advance" payment in May 2012. Ongoing carbon tax assistance began for pensioners in March 2013. Seniors and family payments recipients are due to start receiving payments from mid-2013. On Wednesday, Opposition Leader Tony Abbott said that ''yet again, the government has ripped off the Australian people''. ''If you couldn't trust last year's budget, why should you trust this year's budget?'' He restated his promise that the Coalition would deliver tax cuts without a carbon tax.

The Greens said it was "logical" that after the fixed price period, future household compensation would reflect the carbon price movement. Greens leader Christine Milne said the real question was whether Mr Abbott as prime minister would "slash the tax-free threshold to $6000 and reverse pension increases." Loading The carbon pricing mechanism currently involves a fixed price, starting at $23 a tonne, and will move to a flexible cap and trade scheme from July 1 2015. with Jonathan Swan