Slightly lower deficits, no big revenue windfall from tax reform: Jim Chalmers
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The news: Treasurer Jim Chalmers has confirmed the budget is not expected to forecast any surpluses over the next four years, though will see slightly lower deficits.
And he has warned against expecting a “heap” of new revenue from tax reforms, which are widely anticipated to include changes to capital gains tax discounts, the tax treatment of trusts and potentially negative gearing.
The context: In an interview with Sky News on Sunday morning, Chalmers the improvement to the budget bottom line would be because the government “will be saving more than we spend”.
But he noted the much-awaited tax reform package, which is widely expected to shift the tax treatment of trusts and property, is not anticipated to be a big revenue raiser despite “speculation ... tax reform would raise tens and tens of billions of dollars”.
Instead, he said it is about “recognising that the status quo in housing and tax, and the intersection of those two things, is effectively broken”.
Chalmers also told the ABC the budget would include an upgrade to the revenue from the Petroleum Resource Rent Tax and he appeared to rule out any additional changes to windfall profit taxes on the gas industry, saying the budget is “prioritising ... the supply arrangements and the gas reservation”.
The budget books will be printed later this afternoon.
On Sunday morning, national employer association Australian Industry Group CEO Innes Willox called for the federal government to “turn the ship around” in the budget by “truly” reforming the tax and regulatory systems, addressing spending and focusing on growth and productivity.
“Programs to support industry and households — introduced on a temporary basis over recent weeks — need to be fashioned into durable policy frameworks,” Willox said in a statement.
“Surging spending, structural deficits and an insecure tax base give us less room to move in the face of the oil shock and energy crisis,” he said.
“Genuine company, household and structural tax reform need to be at the heart of the budget and must focus on building a productive and resilient economy.
“Piecemeal changes that simply raise revenue and plug holes in the budget bucket are not genuine reform. Nor will small and tokenistic tax cut handouts to households or businesses fix the dysfunctions of the tax system.”
The sources: Sky News, ABC, Australian Industry Group media release
