Source AP ©

John Howard unveils tax cut plan at start of election campaign

Australian Prime Minister John Howard kicked off his re-election campaign Monday by promising major tax cuts as an opinion poll suggested his government is heading toward a crushing defeat.

A day after calling a Nov. 24 election, Howard and his Liberal Party deputy Peter Costello revealed a plan to cut personal taxes by 34 billion Australian dollars (US$31 billion; EUR22 billion) over the next three years.

"What this is is a bold plan for Australia's future to keep our nation growing, to give people incentive to work," Howard told reporters.

The announcement makes tax policy and Australia's economic stewardship a centerpiece of the campaign.

Opposition leader Kevin Rudd said his center-left Labor Party's tax policy will be revealed later in the six-week campaign.

Costello, the finance minister, said the tax cuts were affordable because the budget for the current fiscal year, drafted in May, had failed to predict that Australia's unemployment rate would fall to a 33-year record low of 4.2 percent for September.

He revealed a review carried out by the finance ministry that increases the tax revenue and economic growth forecasts for the year ending June 30, 2008.

Howard warned that a Labor government would not be able to match his proposed tax cuts because of its plan to limit the circumstances in which workers can be fired.

Unemployment would rise under Labor because employers would be reluctant to expand staff numbers during prosperous times if they could not then shed staff during downturns, Howard said.

A Newspoll survey published in The Australian national newspaper showed that Labor held a crushing 12 percentage point lead over Howard's center-right coalition, 56 percent to 44 percent. The poll asked which party respondents would vote for.

Labor needs a swing of 5 percent of the vote to win its first election since 1993.

Howard warned his colleagues in May that their 11-year-old government was headed for "annihilation" if a similar poll result was repeated at the election.

He declined to comment on Monday's poll - the latest in a series through the year that has placed his government at least 10 percentage points behind Labor.

Howard launched his tilt for a fifth three-year term as prime minister Sunday by asking voters to put aside their anger at his unpopular decision to keep troops in Iraq and trust him one more time to oversee country's booming economy.

The tax policy is Howard's first joint announcement with Costello of the campaign. Howard has promised to retire during the next three-year term and has anointed Costello to replace him as prime minister.

The Newspoll survey was based on a random nationwide telephone survey of 1,234 voters at the weekend. It had a 3 percentage point margin of error.

The Australian newspaper said 75 percent of the respondents were surveyed before Howard officially announced the election at noon Sunday.

Newspoll is regarded as one of Australia's most credible election indicators.

The market research company, part-owned by News Corp., has correctly predicted the results of all 45 federal and state elections in Australia since 1985. The difference between predicted and actual vote flows at those elections has averaged 1.6 percent.

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