Table 2 reconciles this Budget's revenue estimates with those at the 2009‑10 Budget and the 2009‑10 MYEFO.
Table 2: Reconciliation of Australian Government general government
revenue estimates from the 2009‑10 Budget
- Excludes secondary impacts on public debt interest on policy decisions.
Variations to total revenue in the estimates years
Since MYEFO, estimated total revenue for 2009‑10 has been revised up $2.4 billion, almost entirely because of parameter and other variations to taxation revenue.
Indirect tax has been revised up by $3.2 billion largely owing to strong consumer spending resulting in increased GST revenue.
Overall, income taxation has been revised down by $1.2 billion, with lower estimates for company tax, superannuation funds' tax and gross other individuals' tax partially offset by higher estimates for gross income tax withholding. The revisions for gross income tax withholding largely reflect the improved outlook for employment growth, which is partially offset by lower‑than‑expected wage growth.
Policy decisions taken since the 2009‑10 MYEFO contribute $250 million to the overall revision in 2009‑10.
Total revenue for 2010‑11 has been revised up by $17.9 billion since 2009‑10 MYEFO, with policy decisions contributing $1.7 billion and parameter and other variations contributing $16.2 billion. Revisions to income taxes account for the bulk of these. Individuals' incomes, including wages and unincorporated businesses' income, are expected to grow strongly. Company profits are forecast to be higher, reflecting a shallower‑than‑expected downturn in the economy and stronger estimated capital gains.
Non‑tax revenue in 2010‑11 is expected to be $193 million lower than forecast at MYEFO. This reduced estimate primarily reflects reductions in the Reserve Bank of Australia dividend and in fee receipts from eligible financial institutions for the Guarantee Scheme for Large Deposits and Wholesale Funding.
Effect of policy decisions
Policy decisions since the 2009‑10 MYEFO are expected to increase revenue by $1.7 billion in 2010‑11. Policy decisions detract $156 million and $2.1 billion from revenue in 2011‑12 and 2012‑13 respectively, before adding $798 million in 2013‑14. These fluctuations in revenues over the forward estimates mainly reflect the timing of measures included in the Stronger, Fairer, Simpler —A tax plan for our future package, which includes a number of revenue raising as well as spending proposals, as well as the impact of the deferral of the Carbon Pollution Reduction Scheme (CPRS).
Major policy decisions that impact on revenue in the forward estimates period include:
- introducing a 40 per cent Resource Super Profits Tax (RSPT) on non‑renewable resources from 1 July 2012 — the RSPT will raise $12 billion over the forward estimates;
- reducing the company tax rate from 30 per cent to 29 per cent for 2013‑14 and 28 per cent from 2014‑15, at a cost of $2.3 billion over the forward estimates;
- increasing the superannuation contribution cap for individuals over 50 years old with superannuation balances below $500,000, at a cost to revenue of $1.3 billion over the forward estimates;
- providing small businesses with an instant asset write‑off for assets with an acquisition cost under $5,000 and a simplified pooling arrangement, at a cost to revenue of $1 billion over the forward estimates;
- providing a 50 per cent discount for interest income, at a cost to revenue of $1 billion over the forward estimates;
- increasing tobacco excise by 25 per cent, with effect on and from 30 April 2010, which will raise $5.5 billion over the forward estimates — this includes $505 million in underlying cash GST collections that will be paid to the States and Territories;
- increasing funding to the Australian Taxation Office for GST compliance which is expected to increase revenue by $3.0 billion over the forward estimates — this includes $1.56 billion in underlying cash GST collections that will be paid to the States and Territories; and
- deferring the CPRS, with its removal from the estimates expected to reduce revenue by $15.3 billion over the forward estimates.
Table 3: Revenue policy decisions since the 2009‑10 MYEFO
Effect of parameter and other variations
In addition to new policy decisions, revisions to expected revenue are driven by recent economic outcomes and tax collections, and the updated economic outlook. The revenue variations discussed in this section stem from these parameter and other variations. That is, they explicitly exclude the impact of new policy decisions on revenue.
The revenue forecasts are based on the economic outlook presented in Statement 2, with changes in nominal incomes and spending having consequent impacts on expected taxation revenue.
The key economic parameters that influence revenue are shown in Table 4. Analysis of the sensitivity of the taxation revenue estimates to changes in the economic outlook is provided in Statement 3.
As a result of the improvement in the Australian economic outlook, parameter and other variations have increased revenue by $2.2 billion in 2009‑10 and $16.2 billion in 2010‑11 since 2009‑10 MYEFO.
Tax revenue has been boosted by stronger forecasts of growth in nominal non‑farm GDP, which has been revised up 1.7 and 3.1 percentage points in 2009‑10 and 2010‑11 respectively from 2009‑10 MYEFO estimates. Most components of nominal income have been revised up, primarily reflecting upward revisions to unincorporated business and property income, company profits and consumption in 2009‑10.
Gross income tax withholding revenue is expected to be around $0.7 billion higher in 2009‑10 and $5.1 billion higher in 2010‑11 than forecast at 2009‑10 MYEFO. This is largely because of faster growth in employment in 2009‑10, partly offset by weaker wage growth due to a decrease in average hours worked. In 2010‑11, upward revisions are driven by both stronger wage growth and some further employment growth.
Table 4: Key revenue parameters(a)
- Current prices, per cent change on previous years. Changes since MYEFO are percentage points.
- Compensation of employees measures total remuneration earned by employees.
- Corporate GOS is an Australian National Accounts measure of company profits.
- Property income measures income derived from rent, dividends and interest.
na Data not available.
Gross other individuals' tax receipts have been revised down by $0.5 billion in 2009‑10 from MYEFO. This primarily reflects weaker‑than‑anticipated collections to date. In 2010‑11, revenue from gross other individuals has been revised upwards by $2.1 billion from 2009‑10 MYEFO, mainly owing to upward revisions to unincorporated business income and higher estimated capital gains.
Superannuation funds tax revenue is expected to be around $0.7 billion lower in 2009‑10 and $1.0 billion lower in 2010‑11 than forecast at 2009‑10 MYEFO, due to higher deductions being claimed to offset taxable incomes (in the current year) as well as increased dividend imputation credits. The outlook for 2010‑11 is for increased dividend incomes, which will lower the amount of tax payable through increased imputation credits.
Company tax revenue in 2009‑10 is now expected to be $1.0 billion lower than the 2009‑10 MYEFO estimate. This is mostly due to lags between the improved investment conditions and profit and tax revenue. Company tax revenue in 2010‑11 has been revised up by $7.4 billion since MYEFO, reflecting stronger growth in corporate profits and higher estimated capital gains, with some offset by prior‑year losses to be recouped.
CGT, which is a component of individuals', companies' and superannuation funds' income taxes, is now estimated to be higher by $1.4 billion in 2009‑10 and by $2.2 billion in 2010‑11 compared with MYEFO. This reflects the continued improvements in asset prices.
GST revenue has been revised up by $2.5 billion in both 2009‑10 and 2010‑11 since MYEFO, primarily reflecting strong consumer spending and the improved outlook for growth in consumption subject to GST and ownership transfer costs.
Luxury car tax revenue is estimated to be higher than MYEFO forecasts by $100 million in 2009‑10 and $170 million in 2010‑11. Car sales are returning to levels prior to the downturn and, notwithstanding some easing in sales following the phasing out of targeted tax breaks associated with fiscal stimulus, the level of activity is expected to remain strong.
Excise duty revenue has been revised up by $280 million in 2009‑10 since MYEFO, reflecting stronger‑than‑expected growth in the production of diesel, crude oil, blended fuels and tobacco. In 2010‑11, revenue from excise duty is anticipated to be $650 million lower than the MYEFO forecast, mainly due to the expected relocation overseas of a cigarette producer. The fall in tobacco excise revenue is expected to be partially offset by growth in excises from the production of diesel and blended fuels.
Customs duty revenue estimates remain broadly in line with MYEFO estimates in 2009‑10. Some weakness in general imports is offset by stronger imports of passenger vehicles. In 2010‑11, customs duty revenue has been revised upwards by $1.1 billion, mainly owing to the expected relocation of the cigarette producer. The total effect of the relocation on combined revenues from excise and customs duty is expected to be neutral.
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