AUSTRALIAN ELECTION CAMPAIGN FOCUSSES ON TAX CUTS
Treasurer Paul Keating said the
opposition's tax-cutting policy, a key issue in the run up to
the July 11 elections, was a miscalculation that would severely
damage the Australian economy.
    Opposition leader John Howard disputed Keating's
allegations. "Keating is engaged in a desperate, last ditch
panic attempt to deny long-suffering Australian taxpayers the
cuts to which they are entitled," he said.
    Keating said in a radio interview that errors in Howard's
plan, including "double counting," would increase the budget
deficit and could push interest rates above 20 pct.
    Keating said that Treasury officials who had studied
Howard's plans concluded that his proposed tax and spending
cuts would result in a nine billion dlr deficit and damage
international market confidence in Australia.
    In his mini-budget on May 13 Keating said the budget
deficit for the year ending June 1988 would be between two and
three billion dlrs.
    Howard has said a conservative government under his
leadership would reduce the 55 pct top personal and company tax
level to 38 pct and fund the reduction by cutting government
spending.
    Keating and Prime Minister Bob Hawke have promised not to
increase taxes or impose new ones, but rejected any tax cuts.
Instead they called for wage and other economic restraints to
help overcome balance of payments and foreign debt problems.
    Inflation declined to 9.4 pct for the year to March 31 from
an annual 9.8 pct at the end of the December quarter.
    Hawke has said inflation would fall to six pct by the
middle of next year.
    Australian bank lending rates to best customers have
dropped to around 16.5 pct from a high of 19 pct nine months
ago.
 REUTER
