In its annual economic assessment report, released on Wednesday, the International Monetary Fund praised Australia for its continuing resilience, but urged the government to reduce the top personal income tax rate (48.5%) in line with the company tax rate (30%) in order to slow the 'brain drain' of educated professionals leaving to work in other countries.
The IMF report predicted growth of around 4% for fiscal 2002-03, and observed that 'the fiscal position is sound and should remain that way given the authorities' medium-term objective of keeping the budget in balance over the business cycle.'
However, it also suggested that: 'consideration be given to lowering the top marginal personal income tax rate and increasing the threshold at which it applies'.
Another recommendation designed to enhance incentives to work, save, and invest made in the report was to reduce: 'the high effective marginal tax rates that income support recipients face when they go from welfare to work.'
The ABC News network reported on Thursday that Federal Treasurer, Peter Costello welcomed the IMF report, but announced that the drought, coupled with the continuing global economic downturn are still major obstacles to be overcome.
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