Costello's Income Tax Package Receives Senate Approval

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

18 June 2003

The Australian Senate has approved the government's income tax relief package in a vote held on Monday. It is expected to be worth A$10.7 billion and benefit some 9 million Australians over the next four years.

The tax cuts will come into effect from July 1 this year, and will cost A$2.4 billion in the fiscal year to June 4 2004, according to reports. The government managed to pass the income tax package despite an opposition majority in the upper house, and criticism that the tax cut is far too small to be beneficial to the economy.

Australian Treasurer Peter Costello rebuffed this suggestion, and claimed that the tax cuts were a sign of the government's competent fiscal management. "The fact that the government is now able to cut income taxes is a payoff from strong economic management," Costello told reporters recently, predicting that the effect of the tax cuts will be "mildly stimulatory".

The changes made in the income tax package are expected to benefit the average Australian by A$4 per week. However, the government has indicated that further tax cuts may be possible in future, provided the fiscal balance stays in surplus.

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