Fall in tax receipts since the global financial crisis

Since the global financial crisis (GFC), tax receipts as a share of GDP have fallen significantly. The total write-down in tax receipts over the five years since the 2008-09 Budget is around $170 billion.

Write-downs are also affecting the forward estimates. Tax receipts, before policy decisions and excluding GST, have been revised down since the 2012-13 MYEFO by $12.3 billion in 2012-13, $15.9 billion in 2013-14 and a total of around $60 billion over the four years to 2015-16. Company tax is the single largest contributor to the write-downs. Lower than expected capital gains tax (CGT) and resource rent taxes have compounded the fall in company tax receipts.

CGT receipts are expected to recover over the forward estimates, however the recovery is slower than projected at the 2012-13 MYEFO and will remain lower than the pre-GFC peak. Asset prices have recovered since the 2012-13 MYEFO but remain well below pre-GFC levels. A large stock of capital losses is expected to continue to weigh on CGT receipts over the forward estimates.

Had tax receipts as a percentage of GDP stayed at the level inherited by this Government in 2007-08 (23.7 per cent) then the Budget would have been in surplus from 2012-13 onwards.

Revenue write-ups and write-downs

Budget balance comparison if tax-to-GDP ratio remained at 2007-08 level