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SYDNEY: Australia's budget will cut tax for all workers as it takes advantage of a higher than expected surplus, according to media reports.
Monday's Australian Financial Review said the government has shelved plans for tax relief just to business or high-income earners and decided instead to spend a substantial slice of its surplus on across-the-board income tax cuts.
It quoted senior sources as saying the decision was an acknowledgement that family budgets were under strain due to high petrol prices and rising living costs in items such as health insurance premiums.
The fresh tax cuts will come on top of cuts announced in last year's budget for people on incomes of 58,000 dollars (45,240 US) or more, which are due to apply from July 1.
The sources said they would still leave strong budget surpluses in the coming year as the government continues to pay down debt and establishes its Future Fund to meet public sector superannuation liabilities.
The Access Economics consultancy has forecast a surplus in the current financial year ending June 30 of 13.4 billion dollars, compared to the previous estimate of 6.2 billion dollars, due to surging company profits and strong employment growth.
It predicts a 2005-06 surplus of 10.9 billion dollars, without taking into account the impact of the new tax cuts.
The budget to be presented to parliament by Treasurer Peter Costello will also offer financial incentives for welfare recipients to take part-time jobs. And it will provide 80,000 more child care places to make it easier for single parents to go back to work.
Costello has said the aim is to ensure the nation can handle the ageing of the population over the next four decades.
The budget has been overshadowed by rising leadership tensions between Prime Minister John Howard and Costello, who is growing increasingly frustrated at the refusal of the 65-year-old leader to stand aside and let him take the top job.
Howard recently upset Costello by indicating he may contest the next election due in 2007 and referring to the budget as his 16th rather than Costello's 10th.
But an opinion survey in Monday's The Australian newspaper showed 61 percent of voters wanted Howard to stay in the job compared to just 23 percent backing Costello. - AFP/ir
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