Australian Government, 2013-14 Budget

Statement 5: Revenue

Since the 2012‑13 Budget, tax receipts have been revised down by around $17 billion in 2012‑13. This brings the total write‑down in tax receipts over the five years since the 2008‑09 Budget to around $170 billion. Since the 2012‑13 MYEFO, tax receipts have been revised down by around $60 billion over the four years to 2015‑16.

Tax receipts have been significantly affected by weaker than expected nominal GDP growth. Weaker commodity prices and the persistently high Australian dollar, which has put pressure on domestic prices, have hit company profits across most of the economy, including the resources sector. This has had a significant impact on the level of company tax receipts expected in 2012‑13 and over the forward estimates.

Lower than expected capital gains tax and resource rent taxes have compounded the fall in company tax receipts. Income tax withholding and consumption taxes have been revised down to a lesser extent, as wages are expected to grow modestly and consumption growth remains solid over the forward estimates. The fall in tax receipts have been partly offset by policy measures including measures designed to ensure the integrity of the tax base.

The tax‑to‑GDP ratio is expected to rise from 21.5 per cent in 2012‑13 to 23.2 per cent by the end of the forward estimates. The average tax‑to‑GDP ratio in the five years to 2012‑13 is lower than any period since the five years ending in 1995‑96.

In 2012‑13 alone, tax receipts have been revised down by $33.5 billion since the 2010 Pre‑Election and Fiscal Outlook. If the tax‑to‑GDP ratio was the same as it was in 2007‑08 (23.7 per cent), the year immediately prior to the global financial crisis (GFC), tax receipts would be around $24 billion higher in 2013‑14.

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