A comprehensive review of Australia's tax system will be unveiled with Tuesday's federal budget - but the GST and tax-free superannuation will be off-limits.

Treasurer Wayne Swan said it was time for a sweeping inquiry into state, federal and local government taxes across the nation, including the potential impact of a carbon emissions trading scheme.

Treasury secretary Ken Henry will head the review, assisted by academics, former tax officials and industry figures.

Mr Swan, who is preparing to hand down the first federal Labor budget in 13 years, said the tax system needed to be more efficient and internationally competitive.

"We think a modern economy needs a modern tax system," Mr Swan told the Nine Network.

"A modern tax system needs to be efficient, it needs to be internationally competitive. It certainly also needs to be fair, it needs to ensure that everybody pays their fair share, and it needs to be simpler."

But the government has already ruled out broadening the base of the GST or lifting the rate, and has promised to keep tax-free superannuation.

Mr Swan's announcement came as he confirmed that he would be lifting the tax on luxury cars priced at more than $57,000 from 25 per cent to 33 per cent in the budget.

The government has already announced a 70 per cent increase in the tax on ready-to-drink alcoholic beverages, reaping an extra $2 billion in revenue.

Finance Minister Lindsay Tanner denied that Labor was heading towards a big-taxing government.

The budget would contain substantial personal tax cuts, as well as an education tax credit and childcare tax rebates, he said.

"All of these things will actually reduce the tax burden, in effect, because it's giving people money back on their tax," Mr Tanner said.

"We're trying to relieve the pressure on inflation, trying to take a bit of the froth off demand, and it's better to do that at the upper end of the income scales than to hit the battlers, the low-income working people."

But opposition treasury spokesman Malcolm Turnbull said Mr Swan and Mr Tanner had tried to give the impression that they would be slashing government spending.

"Wayne Swan is very inexperienced. One minute he's Robin Hood, taxing the rich to give to the poor, the next minute, he's just Postman Wayne, delivering Peter Costello's tax cuts," Mr Turnbull said.

"He set himself up as being this great inflation fighter, being prepared to slash and burn in the budget, and all he is doing so far is putting up taxes. Taxes on alcohol, taxes on cars."

Mr Turnbull also criticised the tax review, saying the government was copying an opposition inquiry already under way.

He questioned whether Dr Henry was the right person to head the review as it raised questions about the inquiry's independence.

"It's far from independent," he told ABC TV.

"Ken Henry's a very smart man and we all respect him, but he's the head of the treasury in the bureaucratic side of things and one would think that a review of this kind should be independent.

"So this looks like a very in-house review. It's asking the treasury to inquire into itself."
Source: AAP