Australian PM Could Woo Voters With More Tax Cut Promises

by Mary Swire, Tax-news.com, Hong Kong

11 June 2001

Having shelved plans earlier this year to implement tax cuts for middle-income earners due to an economic downturn, there is growing speculation in Australia that Prime Minister, John Howard, is considering re-introducing those plans now the economy is stabilising.

It is expected that the tax cut could take the form of about (AU)$8 a week for people who earn $40,000. It is a modest tax cut and with a national election on the horizon it may not impress the voters but Mr Howard's strategy to win over the electorate is likely to include more tax cuts for those earning between $30,000 and $50,000 with the belief that economic growth will exceed budget predictions of 2 per cent this year and 3.25 per cent in 2002.

The Labour Opposition is also relying on Australia's economy to strengthen in the coming months and with the extra funds the party's leader, Kim Beazley, is promoting his 'knowledge nation' programme. 'As we look out to the future, we start to look at the needs that we have as a society to start investing again in our public hospitals, our public schools, our universities, in the knowledge nation,' he has explained.

As long as the US economy does not experience a serious blip, government economists are confident that the average growth for this year will be around 2.3 per cent. GDP growth is expected to be at least 0.5 per cent for this current period which is estimated to lead to 2.5 per cent for the year 2000-01. By the Treasury department's reckoning that growth of 2.5 per cent would present government with funds of $1 billion in the pre-election year that would easily enable Mr Howard to fulfill his tax cut promises.

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