Australia's Treasurer Won't Spend Surplus On Tax Cuts

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

27 September 2001

The Australian federal government has refused to promise any income tax cuts in its election campaign despite the revelation that the Budget surplus for the end of the last financial year is more than double the initial forecast of A$2.3 billion.

With a 2000/01 Budget surplus of $5.6 billion, the government was easy pickings for the opposition with Simon Crean, opposition treasury spokesman, claiming that Peter Costello imposed higher taxes than any other Treasurer in Australian history. He declared: 'They are collecting $10 billion [more] in taxes than when Labor last left office. The government is collecting more taxes, is taking more out of ordinary Australians' pockets and claiming that's good economic management.'

Mr Crean added: 'When Labor left office in 1995/96, the tax burden was 23 per cent of GDP; today it is 24.5 per cent of GDP.'

In a radio interview this week, Peter Costello responded by claiming that 'there would be no room for tax reductions' due to unexpected expenditure on defence and entitlements for the beleaguered Ansett workforce which could be as much as $400 million. In addition, extra border control to process asylum seekers and refugees will be costly but Mr Costello refrained from quoting a figure on this.

He said that the levels of tax collections in 2000/01 was higher by $1.7 billion because of better company profits, and at the same time government spending was $1.8 billion lower than expected due to a fall in the number of welfare payments.

'The [Budget] outcome last year was a little stronger, so the starting base for 2001/02 is a little stronger,' said Mr Costello.

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