Costello Considering Further Income Tax Cuts

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

01 December 2003

Australian Treasurer Peter Costello is clearing the decks for a further round of tax cuts to be introduced in the next budget, according to media reports.

It is said that the tax cuts will be of a similar type to those delivered in the May 2003 budget which resulted in the raising of income thresholds rather than outright tax cuts, and would go towards addressing the issue of ‘bracket creep’, as wage inflation pushes more taxpayers into the higher tax brackets.

However, with an election just around the corner this could be a crucial issue for the government, which is aware that the country’s average income is now in the second-highest 42% income tax bracket.

Costello’s revelation in September this year that the government is $7.5 billion in surplus for the fiscal year which ended in June has also placed pressure on the government to deliver further tax cuts, especially in the light of the $4 per week cut announced in the last budget, which was derided by many as a token gesture.

According to The Australian, should tax revenues continue to flow into the Treasury’s coffers at the current rate then a $10 per week equivalent tax cut could be possible next year.

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