(AFP) The government cut taxes by between one and two percent as part of a stimulus package announced in the national budget today in the face of a slowdown in the world economy.

Prime Minister Dr Mahathir Mohamad, who is also finance minister, said the budget had three main strategies: strengthening growth; diversifying the sources of growth; and ensuring an equitable distribution of wealth.

Maximum personal income tax and tax for non-residents was reduced by one percent to 28 percent in the RM100.52 billion 2002 budget.

The tax cut proposals would cost RM1.2 billion in revenue.

The country's 850,000 civil servants were awarded a half-month salary bonus or a minimum of RM1,000 along with a 10-percent salary increase next year, according to highlights released by the official Bernama news agency.

A range of tax cuts aimed at stimulating business were awarded, with reinvestment undertaken by existing agriculture companies to be granted 100 percent tax exemption against statutory income for five years.

Import duties on 55 products long protected are to be reduced to between 10 percent and 50 percent, down from between 20 percent and 105 percent.

But the prices of petrol and cigarettes will go up.