Scott Morrison explains his taxation changes. THE biggest single revenue item in this year’s budget is the program of cuts to personal income tax,which are expected to cost $13.4 billion in government revenues between 2018 and 2022.
Just behind the personal tax cuts comes the decision not to raise the Medicare levy to pay for the NDIS, which would have raised $12.8 billion over the same four-year period, had it gone ahead.
Pundits had complained that the two would have effectively cancelled each other out, and the budget figures confirm this.
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To offset the loss of personal tax revenues, the government expects to garner a massive $3.6 billion from a “black economy” package to stamp out illicit tobacco sales.
But only a few hundred million dollars of this amount is expected in 2018-19, indicating it is effectively a one-off measure.
The government also expects to raise about $1.2 billion a year in tighter income tax and superannuation tax collections.
Looking at long-term trends, the government expects to collect more than $485 billion in 2018-19, up about $25 billion on this year, and compared with just $303 billion in 2010-11.
The deficit has been reined in to just over $14 billion and while a surplus is predicted in 2019-20, not everyone is convinced, given the potential for spending estimates to blow out, or for revenue assumptions to fall short.
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Although the government says net debt is declining as a share of GDP, the real dollar amounts continue to grow.
Gross debt – the value of Commonwealth securities on issue – is predicted to rise from $561 billion in 2018-19 to $578 billion in 2022, “reflecting the government’s infrastructure spending”, which is largely funded by borrowing.
Total government liabilities are predicted to go from $872 billion in 2017-18 to $905 billion in 2018-19 to$939 billion in 2021-22.
Net debt is predicted to rise to $349 billion in 2018-19, falling slightly to $319 billion in 2021-22, with a net interest bill of about $12 billion a year – or three times the $4-plus billion a year that taxpayers will receive in personal income tax cuts.
Some 18 federal agencies, including the Reserve Bank, NBN Co, submarine builder ASC Pty Ltd and Snowy Hydro, are considered as government corporations and so outside of the general government sector for budget accounting purposes.
When these organizations are considered, we have overall federal public sector revenues of $976 billion, costs of $1.017 trillion and a cash deficit of more than $43 billion.
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