Treasurer Wayne Swan has been forced to rule out lifting income tax rates in the May Budget.
After a morning radio interview in which he refused to quash a suggestion the Government would seek to lift income taxes to fill its Budget shortfall, Mr Swan put out a statement rejecting the idea.
"The proposition of this question is utterly ridiculous and absurd," he said.
"The Government's record on personal income taxes couldn't be more clear. We delivered cuts to personal incomes taxes in three consecutive Budgets worth a total of $47 billion.
"Last year we tripled the tax free threshold, from $6000 to $18,000, removing around one million people from the tax system.
"The irrefutable fact is that someone on $50,000 is paying $2000 less in tax each and every year as result of our personal tax reforms."
Earlier, Mr Swan had told ABC Radio that he would leave speculation on any changes in the Budget to "everybody else".
"There'll be hundreds, hundreds of stories between now and budget day and most of those stories will be wrong," he said.
New Budget figures out tomorrow are expected to give a clearer picture of the challenge facing Mr Swan to promise a surplus in the coming financial year and the size of the shortfall in the current year.
The Treasurer said there was only one party looking to lift income tax rates at the coming election.
"Tony Abbott has an explicit policy of jacking up income tax for hard working Australians everywhere," he said.
"His promise to scrap the tripling of the tax free threshold means a tax hike to over 6 million Australians of at least $300 per year, and brings a million people back into the tax system."