Howard Government Said To Be Mulling Programme Of Deeper Tax Cuts

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

06 April 2004

Tax cuts, rather than expenditure, will be the focus of the Australian government budget due to be delivered by Treasurer Paul Costello on May 11, according to a report in The Australian at the weekend.

Both Costello and Prime Minister John Howard have, in the run-up to the budget, been coy on the subject of tax cuts, trotting out the now-familiar line that whatever is left in the government’s kitty after necessary expenditure has been met will be given back to the taxpayers in some form of tax relief.

"Our position remains that we have certain things we've got to spend money on," Mr Howard told ABC recently. "If there is room then we'll provide tax relief. But in what form and how much I don't know,"

However, the report in The Australian suggests that the government, undoubtedly with one eye on the general election expected later in the year, will use the bulk of an estimated $7 billion budget surplus to fund a series of across the board tax cuts to be phased in over a number of years.

It is thought that the measures will include increasing the income level at which the top rate of tax personal income tax kicks in to $70,000, in addition to adjustments to the family tax benefit targeted at middle income earners, and a likely increase in the low-income tax offset.

Economists are predicting that a bumper yield in company tax returns totalling between $5 billion and $7 billion will be used to help pay for any forthcoming tax cuts, according to the report.

Recommended