Statement 5: Revenue
The 2014‑15 Budget forecasts for tax receipts are broadly unchanged since the 2013‑14 MYEFO, revised upwards by $1.8 billion in 2014‑15 and $2.1 billion over the four years to 2016‑17. Excluding GST, tax receipts are $800 million higher in 2014‑15 but $2.4 billion lower over the four years to 2016‑17.
While the forecast for nominal GDP is similar to the 2013‑14 MYEFO, forecast changes in the composition of growth have affected the composition of tax receipts. Household consumption and corporate profits have been revised up resulting in higher expected GST and company tax, while softer expected wage growth means lower expected individuals and superannuation fund taxes. Overall, these factors weaken the outlook for tax receipts. These variations have been broadly offset by policy decisions, including the Temporary Budget Repair Levy.
The tax‑to‑GDP ratio is broadly unchanged since the 2013‑14 MYEFO.
Relative to the 2013‑14 MYEFO, expected tax receipts have been revised upwards by around $1.8 billion in 2014‑15 and $2.1 billion over the four years to 2016‑17. Excluding GST, tax receipts have been revised up around $800 million in 2014‑15 but down $2.4 billion over the four years to 2016‑17. As GST is paid to the states, tax receipts excluding GST represent the revenue available to the Australian Government.
Excluding policy, changes in the forecasts for the nominal economy have reduced expected tax receipts. Stronger expected company profits and household consumption have resulted in upward revisions to company tax and GST totalling around $9.2 billion over the four years to 2016‑17. This has been partially offset by weaker expected wage growth contributing to the write‑down of individuals and superannuation fund taxes over the forward estimates totalling around $7.3 billion. In addition, tobacco excise and customs duties estimates as well as resource rent taxes forecasts have in total been revised down $3.4 billion over the four years to 2016‑17.
Total tax receipts as a per cent of GDP are expected to increase from 21.6 per cent in 2013‑14 to 23.2 per cent by the end of the forward estimates, an increase of 1.7 percentage points (Table 1). However, excluding GST the tax‑to‑GDP ratio is expected to increase by 1.5 percentage points.
|Total taxation receipts ($b)||326.4||341.6||360.4||385.3||411.7||437.6|
|Growth on previous year (%)||5.3||4.7||5.5||6.9||6.9||6.3|
|Per cent of GDP||21.4||21.6||22.1||22.5||23.0||23.2|
|Tax receipts excluding GST ($b)||278.4||290.9||306.7||328.3||351.3||373.8|
|Growth on previous year (%)||5.5||4.5||5.4||7.0||7.0||6.4|
|Per cent of GDP||18.3||18.4||18.8||19.2||19.6||19.8|
|Non-taxation receipts ($b)||24.6||21.9||25.4||25.1||25.2||30.4|
|Growth on previous year (%)||23.6||-11.3||16.3||-1.0||0.1||20.9|
|Per cent of GDP||1.6||1.4||1.6||1.5||1.4||1.6|
|Total receipts ($b)||351.1||363.5||385.8||410.4||436.8||468.0|
|Growth on previous year (%)||6.4||3.5||6.1||6.4||6.4||7.1|
|Per cent of GDP||23.1||23.0||23.6||24.0||24.4||24.9|
Total receipts, including non‑tax receipts, have been revised down by $1.4 billion in 2013‑14, up $3.0 billion in 2014‑15 and up $7.0 billion over the four years to 2016‑17 (see Table 4). Relative to the 2013‑14 MYEFO, tax receipts have been revised down by $1.8 billion in 2013‑14, up $1.8 billion in 2014‑15, and up $2.1 billion over the four years to 2016‑17 (Table 2).
|Tax receipts at 2013‑14 Budget||354,854||377,751||405,809||431,494||1,569,908|
|Changes from 2013‑14 Budget to 2013 PEFO|
|Effect of policy decisions||947||-1,738||1,179||4,784||5,172|
|Effect of parameter and other variations||-7,691||-8,508||-8,327||-8,167||-32,693|
|Tax receipts at 2013 PEFO||348,110||367,506||398,661||428,111||1,542,387|
|Changes from 2013 PEFO to 2013‑14 MYEFO|
|Effect of policy decisions||1,674||-908||-3,020||-5,470||-7,724|
|Effect of parameter and other variations||-6,304||-7,995||-11,202||-12,310||-37,811|
|Tax receipts at 2013‑14 MYEFO||343,480||358,603||384,439||410,331||1,496,853|
|Changes from 2013‑14 MYEFO to 2014‑15 Budget|
|Effect of policy decisions||-2||614||1,837||2,600||5,049|
|Effect of parameter and other variations||-1,836||1,155||-990||-1,240||-2,911|
|Tax receipts at 2014‑15 Budget||341,643||360,372||385,286||411,691||1,498,991|
The upward revision in tax receipts in 2014‑15 is primarily driven by stronger anticipated wage growth in 2014‑15 since the 2013‑14 MYEFO. However, over the remaining forward years, wages are expected to grow less strongly relative to the 2013‑14 MYEFO.
Abstracting from policy decisions, tax receipts have been revised down $2.9 billion over the four years to 2016‑17 since the 2013‑14 MYEFO. Policy measures add $5.0 billion to tax receipts over the four years to 2016‑17. These measures include reintroducing the indexation of fuel excise, introducing a temporary levy on individuals' taxable incomes above $180,000 and removing poorly targeted tax concessions. Since the 2013 PEFO, policy decisions have lowered tax receipts by $2.7 billion over the four years to 2016‑17. For more details on revenue and expense measures introduced at this Budget, refer to Budget Paper 2.
The 2013‑14 MYEFO made provisions for a number of election commitments that were still subject to finalisation at the time. These provisions related to the introduction of a 1.5 per cent company levy to fund the new Paid Parental Leave Scheme, as well as the associated increased income and superannuation taxes flowing from the scheme and the reduction in company tax rate to 28.5 per cent. In addition, a provision was made for the impact of a free trade agreement with Korea and for unfunded superannuation liabilities relating to New South Wales universities.
The MYEFO provision for the Korea-Australia Free Trade Agreement and unfunded superannuation liabilities relating to New South Wales universities have now been removed as these impacts are included as measures in the 2014‑15 Budget.
The 2014‑15 Budget provisions for the Japan Economic Partnership agreement as well as continuing to provision for the introduction of a 1.5 per cent company levy to fund the new Paid Parental Leave Scheme and reduction in the company tax rate to 28.5 per cent.