Australian tax cuts face criticism

Tax cuts announced by Australia's treasurer Peter Costello have come in for criticism, it has been revealed.

According to reports, despite the sound of AU$34 billion (£14.9 billion) in tax reductions, the proposed discount to taxpayers has been described as little more than a mirage because of the automatic indexation policy first implemented in 1976.

"This is a three-stage reform of the Australian tax system, the first stage of which takes place in July 2008," said Mr Costello to Fran Kelly of Radio National.

"So economically it can't have any effect until July 2008. And of course that is just the first stage," he added.

However, data published by Australia's Centre for Policy Development demonstrates the total amount of the tax discount equates approximately with the indexation figure that would be applied over the specified period of the reduction.