Australia announces major tax cuts to boost economy

| May 11, 2005 | 0 Comments
Australia announces major tax cuts to boost economy

The centre-right coalition government of Australia announced tax cuts larger than what had been expected on Tuesday.

It is using a budget surplus to promise Australians A$21 billion ($16.8 billion) in personal income tax cuts over four years.

The cuts are an effort to halt a slowdown in the economy that will this year likely post its lowest growth rate in over a decade. The Treasury cut its prediction for growth in the fiscal year to end in June to 2 percent.

Six months ago it had predicted that growth would amount to 3 percent for the year.

It has also now forecast a growth rate of 3 percent for fiscal year 2005-06, well below the 4 percent and more growth per year in the 1990s. Another measure announced by the government to stem the slowdown was an outright abolishment of a pension contribution surcharge tax for earners in high brackets.

Big business was disappointed that it did not receive a larger share of the cuts. Corporate taxes are scheduled to fall by only A$1.8 billion.

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