CANBERRA - Labor has warned that Treasurer Peter Costello risks putting upward pressure on inflation and interest rates with a free-spending Budget on Tuesday night.
But Labor's treasury spokesman Wayne Swan conceded some tax relief would be welcomed by families.
The Australian newspaper today predicted taxpayers would gain across-the-board relief as Mr Costello prepared to distribute the proceeds of stronger growth, lower inflation and a healthy surplus.
Others have speculated that tax cuts would provide an opportunity for the government to make up ground against Labor which has been holding a strong lead in opinion polls for months.
Mr Swan said the government needed to set down a careful Budget.
"Australian families would certainly welcome some tax relief provided it doesn't put upward pressure on inflation and upward pressure on interest rates," Mr Swan said.
"After all, there have been four interest rate rises since (Prime Minister) John Howard promised to keep them at record lows."
Employment Minister Joe Hockey declined to reveal anything about tax cuts.
"The treasurer will deliver a responsible budget on Tuesday night," he said.
"Budgets should be responsible. It's important that the Budget reflects the economic times (and) be prudent and responsible and the treasurer will deliver a prudent and responsible budget."
Australian Council of Social Service executive director Andrew Johnson reacted with concern to the prediction of across-the-board tax cuts.
He said improved services would be more popular than tax cuts.
"When you poll general Australians, when asked, they would much rather investment in services than tax cuts," he said.
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