According to reports this week, there are signs that the Australian government may be considering a tax cut ahead of next year's federal elections. However, Prime Minister John Howard was giving nothing away in an ABC radio interview earlier this week.
In fiscal 2002/2003, tax revenues grew by almost 9%, whilst growth in income earned by both individuals and companies was a more modest 5.5%. A record $235 billion flowed into the government's coffers from state and provincial taxpayers last year. The figures have served to turn up the heat on the Howard administration, which was widely criticised for delivering a mere $4 per week tax cut in the last budget despite a projected budget surplus.
According to Access Economics, the government is expected to announce a $6 billion surplus for 2002/2003, some $2 billion more than anticipated in the budget forecast in May. The Daily Telegraph also reported that Treasurer Paul Costello has transferred aound $1 billion of Reserve Bank profits into the Treasury account for 2004/2005, suggesting that the government is paving the way for tax cuts. Access predicts that these will take place in July next year, just ahead of an election in the latter half of 2004.
"Access Economics has been tipping a pre-election tax cut, partly paid for by the surging company profit taxes of the moment," Access director Chris Richardson told The Telegraph, adding: "And now we know where the rest of the financing is coming from."
John Howard, meanwhile, has sought to pour cold water on the media speculation by denying any knowledge of a Treasury war chest boosted by burgeoning tax revenues. "It would be good if that's the case, but I haven't seen any information from my department or the Treasury or the Department of Finance that would tell me that the likely revenue for the budget next year is much greater than we forecast at budget time (in May)," Howard told the Australian Broadcasting Corp.
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