(a) All revenue data in this table are produced on a AAS31 basis. All estimates expressed as a proportion of GDP use current MYEFO GDP estimates. There has been a reclassification of revenue since Budget of around $1 billion from tax to non-tax components. Estimates are net of the diesel fuel rebate scheme.

(a) All data in this table are produced on a AAS31 basis unless otherwise specified.

Policy decisions subsequent to the 1999-2000 Budget are estimated to reduce revenue marginally in 1999-2000 but increase it significantly in the following years. All revenue policy decisions are listed in Table 13 (and detailed in Appendix A).

The main increase in revenue derives from changes to A New Tax System, following agreement with the Australian Democrats to secure legislation in the Senate. In particular, reductions in income tax cuts for income earners over $50,000 and changes to the Diesel Fuel Rebate Scheme will together add around $1½ billion to revenue from 2000-01, which partly offsets the expenditure increases from that package. (See Box 2, Part I.)

The other major package of tax reform measures is The New Business Tax System. Over the period as a whole, these measures are estimated to be broadly revenue-neutral, with gains to revenue in 2000-01 and 2002-03 slightly more than offsetting losses in the other two years. (See Box 2, Part I.)

The temporary Defence — East Timor levy, to partially offset the costs of Australia’s involvement in East Timor, adds $900 million to revenue in 2000-01. (See Box 1, Part I.)

(a) All data in this table are produced on a AAS31 basis.
(b) Includes tax on realised capital gains.
(c) PPS denotes Prescribed Payments System which includes Reportable Payments System payments by individuals (around $2 million in 1999-2000).
(d) Includes superannuation contributions surcharge.
(e) Excludes revenues raised on an agency basis for the States and Territories (for example, Revenue Replacement Payments).
(f) Estimates for Petroleum Products Excise are net of the diesel fuel rebate scheme (around $1.6 billion in 1999-2000).
(g) Customs duty collections include customs duty imposed on imported petroleum products, tobacco, beer and spirits, which is akin to excise duty on these items (around $900 million in 1999-2000).
(h) Excludes Fringe benefits tax collected from Commonwealth Government agencies (around $300 million in 1999-2000).

Table 14 shows that, for 1999-2000, net downward revisions to both income tax and indirect tax are largely offset by upward revisions to fringe benefits tax, other taxes and non-tax revenue.

Downward revisions have been made to the following revenue items:

• Individuals income tax (both PAYE and other), reflecting a reduction in the estimated provision for outstanding revenue considered unlikely to be collected, but with little variation in the outlook for household income growth;

• Companies tax, reflecting: the base effect of a lower than expected outcome for 1998-99; slower than expected growth in taxable income in the 1998-99 income year; downward variations of payments by some large taxpayers (which reflect the individual circumstances of those companies rather than general macroeconomic conditions); and greater than expected deductibility of Y2K expenditure (although this revenue loss is likely to be largely recouped in later years);

• Sales tax, largely as a result of recent court decisions and a reassessment of spending on certain components of the sales tax base (particularly in the latter half of 1999-2000); and
• Petroleum excise, largely due to lower than expected collections to date.

Upward revisions to revenue result from the following movements:

• Gross Prescribed Payments System, largely due to stronger dwelling sector activity and the strength of collections in the early part of the financial year;
• Individuals Refunds, reflecting substantially lower than expected outcomes in the year to date, a period when the greater part of refunds are normally processed;
• Petroleum Resource Rent tax, largely due to recent strength in oil prices;
• Other excise, largely due to higher tobacco excise collections;
• Other taxes, partly due to slightly higher than anticipated revenue from some agricultural production taxes; and
• Non-tax revenue, primarily due to larger dividends from Telstra and the Reserve Bank of Australia (RBA) and increased interest revenue from investments and swaps as a result of an increase in market interest rates and an upward revision to the swaps program.

Preliminary forecasts for 2000-01 indicate that, in addition to a substantial impact from policy decisions, the aggregate effect of economic parameter and other variations is small, but positive. Once allowance is made for higher prices resulting from changes to indirect taxation, the preliminary forecast for nominal GDP growth in 2000-01 is very similar to Budget projections. Of itself, the economic outlook would thus suggest little need for change to the budget-time estimates.

However, there are some other variations which will have important, though largely offsetting, impacts. Tending to boost revenue in 2000-01 (and in subsequent years) is the reclassification since Budget of a portion of the diesel fuel offset to excise as a grant (increasing expenses by an equivalent amount). However, company taxable income growth is likely to remain lower than broader measures of corporate performance and overall macroeconomic indicators would suggest, and a continuing high level of deductible expenditure on information technology upgrades (associated with Y2K and the GST) is expected.

Forward projections for revenue in 2001-02 and 2002-03 are higher than presented at Budget due to a combination of the waning of these constraining influences, the ongoing substantial impact of the diesel fuel offset and policy decisions since the Budget. Some further detail on the major categories of revenue is shown in Table 15.

Click to enlarge Table 15

Table 16 shows estimates for the period 1995-96 to 2002-03 of aggregate tax expenditures that have been identified and costed in the Tax Expenditures Statement 1997–98 (TES), which was published in July 1999.

In analysing the data presented in Table 16, there are a number of considerations that must be kept in mind.