Howard Hints That Further Australian Tax Cuts Are Possible

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

02 October 2003

Australian Prime Minister John Howard has raised hopes of a pre-election tax cut by suggesting that the threshold at which the top rate of income tax kicks in is too low, and should be raised.

Currently, the top tier of income tax applies on earnings above $62,000 per year, but Mr Howard thinks this threshold should be increased to a salary level of $75,000 per year.

"I think the top rate of tax cuts in too early in this country, that's one of the weaknesses of our system, but in order to get that up we have to get that through the Senate," the Prime Minster announced recently.

The Howard administration has been under pressure for some time to lower taxes after Treasurer Paul Costello delivered what most considered a somewhat less than generous tax cut averaging $4 per week in the last budget. This pressure has been intensified by the government's announcement of a $7.5 billion budget surplus for the previous financial year, way above the Treasury's previous estimate.

However, Howard now seems more willing to countenance the idea of fresh tax cuts than previously: "It is our view that if you do have more than you expect because of the strong economy, after you have met all necessary and socially desirable expenditures, what is left over should be returned to the people who gave the money in the first place, and that is the taxpayers," the PM revealed to Adelaide Radio 5DN this week.

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