Australian Treasurer Vows A$5bn Tax Cuts In Next Week's Budget

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

15 May 2001

In an interview on national television at the weekend, Australian Treasurer Peter Costello said the Australian government will cut taxes by more than A$5bn (US$2.5bn) in its budget next week. 'This will be a budget which dramatically cuts taxes,' said Costello. 'This will be a balanced budget, which means we won't spend any more money than we have.'

Tax reforms, which have already been announced and are to be phased in under the budget to be presented on May 22, include a cut in the corporate tax rate from from 34 per cent to 30 per cent at a cost of A$2bn, the abolition of a duty worth more than A$1bn on financial institutions and business tax cuts allowing companies to claim back 50 per cent of the Goods and Services Tax (GST) when they buy cars.

However, Mr Costello said that the government will not be changing the 10 per cent GST introduced last year. He stated: 'The important thing in relation to GST now is to bed it down so that people are certain as to where it lies. I don't think business wants changes now.' He said that it was too early for further income tax cuts because the reductions introduced under the GST reforms had only just come into play: 'They mean that now 80 per cent of Australians only face a personal income tax rate of 30 per cent – a top rate of 30 per cent when previously they were on 43 per cent,' he said.

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