Peter Martin reviews the MYEFO
Economics correspondent Peter Martin explains the fall in government revenue, confirmed in the mid-year economic review and the government's efforts to keep alive its budgets surplus.
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The budget will receive a $8.3 billion boost in the three years from 2014 as the government moves to collecting company taxes every month, rather than quarterly.
The measure, which will initially apply to the country’s 350 biggest companies before being broadened to smaller firms, comes amid heavy write-downs in the revenue raised by corporate taxes and the mining tax.
The mid-year budget update, released today, said that from January 2014, businesses with annual turnover of $1 billion or more would pay company tax in monthly instalments, to align tax more closely with their trading conditions.
In its first year the measure is expected to give the budget a $5.5 billion boost because it will collect revenue that would have been paid in future months.
Accountants say it will not result in business paying significantly more tax overall, but will increase the compliance burden and require companies to pay their tax earlier.
With businesses likely to oppose any moves to extract more revenue, Treasurer Wayne Swan said the change would provide a more timely and accurate reading of the corporate tax take, but was not a tax rise.
‘‘We think this is only fair and it’s only logical,’’ Mr Swan said in Canberra. ‘‘We don’t see why companies cannot be in the same boat as companies that pay their GST monthly.’’
Canada, Sweden, Finland and the Netherlands had similar systems in place, the government said.
Despite the change, today’s update also revealed tax collections from corporate Australia were suffering heavily amid a slowing of the mining boom.
Company taxes are forecast to be $4 billion lower this year and almost $22 billion lower over the four-year forward estimates.
Mr Swan said the downgrades had mainly been caused by lower commodity prices and general weakness in corporate Australia.
Revenue raised by the mining tax has also been downgraded by more than $3 billion, to $6.5 billion from $9.7 billion.
Mr Swan said the reduction in expected intake was a reflection of how the mining tax was supposed to work - in contrast to state royalties that are charged on miners' revenue or production.
‘‘When profits are high they pay more, and when profits are low they pay less,’’ he said.
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