Revenue
Total accrual revenue in 2006-07 is expected to be $223 million higher than forecast at the 2006-07 Budget, comprising an additional $323 million in non-tax revenue and a decrease of $101 million in tax revenue.
The revised tax revenue estimates are driven by the flow on effects of a lower than expected revenue outcome in 2005-06 and downward revisions to expected revenue from capital gains from investors and petroleum resource rent tax, broadly offset by higher than expected revenue from higher forecasts of nominal economic growth in 2006-07.
Policy decisions since Budget have reduced revenue by $202 million in 2006-07.
The Government announced details of the Simplified Superannuation package on 5 September 2006. This package will cost $3.9 billion in revenue over the forward estimates. The revenue estimates in the 2006-07 Budget included an allowance for the package. The final package has now been incorporated into the estimates as a measure.
Other major policy measures reducing revenue over the four year period 2006-07 to 2009-10 include:
- $53 million in 2006-07 ($218 million over four years) owing to a decision to not proceed with planned increases in diesel excise and customs duty rates; and
- $50 million in 2006-07 ($350 million over four years) from an amendment to the investment rules for superannuation funds investing in instalment warrants.
A full list of revenue measures announced since the 2006-07 Budget is provided at Appendix A.
Detailed Australian Government general government sector revenue estimates for 2006-07, compared with the estimates published in the 2006-07 Budget, are provided in Table 7. Detailed cash estimates are in Table 12.
Table 7: Australian Government general government sector revenue
- The MYEFO estimate includes Medicare levy revenue of $7,090 million in 2006-07.
The revenue estimates for 2006-07 and 2007-08 are constructed using the outcomes for 2005-06, information on revenue collections in the year to date and the revised economic forecasts for 2006-07 and 2007-08. Revenue estimates for the projection years — 2008-09 and 2009-10 — are based mainly on underlying trends in economic parameters and take no account of cyclical influences on economic activity. As at the 2006-07 Budget, key commodity prices are assumed to return to their long-run average level over the two projection years.
Total taxation revenue for 2006-07 is expected to be $101 million lower than forecast at the 2006-07 Budget. Lower than expected revenue outcomes in 2005-06 for company tax and other individuals and downward revisions to expected revenue from capital gains and petroleum resource rent tax in 2006-07 are expected to be broadly offset by the effects of stronger than expected employment growth.
Estimated revenue from gross income tax withholding for 2006-07 has increased by $1.6 billion since the 2006-07 Budget, in line with stronger than expected employment outcomes.
Superannuation contributions and earnings tax revenue has been revised up by $560 million in 2006-07, in the light of the increased strength in the labour market and more buoyant conditions for superannuation fund earnings.
Company tax revenue in 2006-07 is expected to be $110 million lower than the 2006-07 Budget estimate, reflecting a lower than expected outcome in 2005-06, partly offset by an increase in expected profits for 2006-07.
Expected gross revenue from other individuals tax has been revised down by $1.1 billion in 2006-07, driven by a lower than expected outcome in 2005-06 and lower than expected growth in realised capital gains from investors.
Petroleum resource rent tax has been revised down by $740 million in 2006-07 since the 2006-07 Budget, in the light of lower oil prices, higher than expected deductible costs — including wages and exploration — and lower than expected production.
Expected revenue from all other taxation in 2006-07 is broadly unchanged from Budget.
Non-taxation revenue in 2006-07 is expected to be $323 million higher than the 2006-07 Budget estimate due in part from an increase in sales of goods and services by the Department of Defence.