Scott Morrison vows to cut income tax

TREASURER Scott Morrison has put income tax cuts on the agenda for next year's federal election, promising the benefits of any tax reforms will be returned to taxpayers.

Mr Morrison met state treasurers in Sydney on Thursday to talk tax, but no decisions were made on the future of state taxes or the GST.

All parties had agreed, however, tax reform should be used to create "economic growth" rather than increase government spending, Mr Morrison said.

State treasurers reportedly failed to come to any agreement on changes to the GST or Medicare levy - the two potential revenue raisers discussed in recent weeks.

Mr Morrison said he would move on tax reform without the states if the treasurers failed to agree on options.

His pledge to return any extra revenue raised to taxpayers through income tax cuts seemingly locks the government into further cutting federal spending if a budget surplus is to be reached.

The Federal Treasurer's first major announcement in his portfolio comes next week with the mid-year budget outlook.

That announcement will set the scene for potential income tax cut announcements in next year's budget.

Mr Morrison said the meeting had ensured tax reform would be a key issue in the coming federal election.

Opposition Leader Bill Shorten again criticised any move to change the GST.

He said the government had created a "fire" with $80 billion of cuts to state health and education grants, and was now turning up with the ambulance.

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