lunes, 4 de abril de 2011

TREASURY has warned the federal government that the river of company tax revenue that has supported the budget for the past eight years is drying up, with payments falling massively short of budget projections.

A Treasury executive minute to Wayne Swan has blamed the strength of the Australian dollar and the run of Reserve Bank rate rises for the shortfall, and says the government should not expect the minerals boom to bring a quick turnaround.
The dollar hit $US1.04 yesterday - the highest level since the currency was floated in 1983 - increasing the pressure on industries such as manufacturing, education and tourism.
The Treasury minute shows company tax revenue will reach only $60.6 billion for this financial year, down from the $63.7bn expected when the government's finances were reviewed last November and 10 per cent short of the $66.5bn revenue forecast in last year's budget.
Treasury said that, although the mining industry had boosted its profits by 59 per cent over the past calendar year, the rest of the economy had not achieved any growth in profits.
Although the minute contained numbers for only this financial year, it has serious consequences for the government's promised return to surplus by 2012-13, and helps explain the need for tough budget cuts."Non-mining sectors have been significantly affected by the strong dollar, tightened financial conditions in the wake of the global financial crisis and the continuing slowdown in household consumption," says the minute, obtained by The Australian.
Before last year's election, the government had been buoyed by the renewed strength of the mining boom, which Treasury forecast would help lift company tax revenue to $80bn next year.
That is now about $20bn, or 33 per cent, ahead of where the company tax receipts for this year are likely to end up. The minute advised the Treasurer he should not expect the mining boom to bring a rapid recovery in company profits and federal tax receipts.
Because the big mine companies are investing heavily in expanding production, they have high levels of eligible tax deductions. "Company tax receipts from the sector will be dampened in the next few years by the substantial increase in capital expenditure," the minute states.
The $3.1bn drop in this year's company tax revenue predates the Queensland floods, which are expected to hit the tax payments from coalmining companies hardest in 2011-12.
Over the past few weeks, the government has been highlighting the threat to the budget from the natural disasters and the need for a tough budget.
"Taking some pain now will ensure that households avoid a lot more pain in the future," Julia Gillard warned last week.
The government has argued that it must stick to the surplus target of 2012-13 because it expects the economy will be growing strongly by then. There would be a risk of inflation if the government did not rein in the deficit.
But the rapid deterioration in the government's revenue since the last budget update just over four months ago underlines the challenge it faces in closing a deficit that now looks likely to surpass the $41.5bn forecast for this year.
The Greens said yesterday they would resist a tough budget to protect average people. Greens leader Bob Brown said he was concerned about the Prime Minister's warning of an austerity budget, and pledged his party would vote against a planned cut in the corporate tax rate from 30 per cent to 29 per cent.
When last year's budget was compiled, it was based on an assumed exchange rate of US90c - or 14.5 per cent lower than the rate is now. The 6 per cent jump in the exchange rate in two weeks has taken the markets by surprise, with the rise to yesterday's peak of US104.2c sparked by better-than-expected jobs figures in the US.

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