THE Government has unleashed its first big hit of the federal election campaign, announcing a plan to restructure the tax system to lower tax rates and raise the tax-free threshold.
Prime Minister John Howard and Treausurer Peter Costello have announced the plan, which would take effect over five years - well into a second term if Mr Costello became prime minister.
The plan would see the tax-free threshold raised to $14,000 next year, while the lowest tax rate would kick in on earnings over $34,000.
In following years, the top tax rates would be lowered while the tax-free threshold would be lifted again.
Mr Costello has said the goal of the restructure was to arrive at a tax-free threshold of $20,000 and for there to be only four marginal tax rates, with the top rate set at 40 cents in the dollar.
