Australian Prime Minister John Howard promised yesterday an overhaul of the tax system that would deliver A$34 billion (US$30.7 billion) in tax cuts to voters if he is reelected to a fifth term.
On the first full day of campaigning ahead of the Nov. 24 poll, Howard announced the five-year plan together with his chosen successor Treasurer Peter Costello in a rare public show of unity between the two.
The tax sweetener comes as opinion polls predict Howard will lose in a landslide to a resurgent center-left Labor Party fronted by former diplomat Kevin Rudd.
Among the changes were across-the-board cuts that would gradually lower Australia's top tax rate from 45 percent to 40 percent over five years.
"The reason we are doing this is to encourage more people to join the workforce and to boost the capacity of the Australian economy," Howard said. "This is part of our go-for-growth strategy."
Costello said a major change to benefit low-paid workers was an increase of the tax-free threshold from A$11,000 to A$14,000 from July 1 and A$16,000 from 2010.
He said he wanted to produce a "virtuous cycle" with tax cuts fueling economic growth which in turn would increase government revenues.
The changes, to be introduced to parliament if Howard's conservative coalition wins reelection, would eventually leave 85 percent of taxpayers on a top marginal rate of 30 percent or less.
Some 98 percent would be on a top rate of 35 percent or less, with 45 percent paying only the minimum rate of 15 percent, Costello said.
"I think we have an opportunity now to get the Australian tax system competitive, competitive with other countries around the world and competitive in encouraging people to join it," he said.
The plan would be carried out with the aim of keeping a budget surplus of 1 percent of GDP, putting Australia in an enviable position compared with other developed countries, most of which are in deficit, he said.
Stressing the government's strong record on the economy after 11 years in power, Howard said he aimed to bring unemployment down to 3.5 percent from its current rate of 4.2 percent, already the lowest level in 33 years.
He denigrated the Labor opposition as likely to turn back the clock on economic reform.
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