Statement 4 (continued)
Tax outlook
Table 2 reconciles the 2015‑16 Budget's estimates of tax receipts with the 2014‑15 Budget and the 2014‑15 MYEFO estimates. Relative to the 2014‑15 Budget, tax receipts, including policy, have been revised down by $8.9 billion in 2014‑15, $15.1 billion in 2015‑16 and $54.1 billion over the four years to 2017‑18.
Relative to the 2014‑15 MYEFO, tax receipts, including policy, have been revised down by $2.1 billion in 2014‑15, $6.5 billion in 2015‑16 and $20.8 billion over the four years to 2017‑18.
| Estimates | Projections | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014‑15 $m |
2015‑16 $m |
2016‑17 $m |
2017‑18 $m |
Total $m | |||||||
| Tax receipts at 2014‑15 Budget | 360,372 | 385,286 | 411,691 | 437,562 | 1,594,911 | ||||||
| Changes from 2014‑15 Budget to 2014‑15 MYEFO | |||||||||||
| Effect of policy decisions | ‑556 | ‑554 | ‑312 | ‑339 | ‑1,761 | ||||||
| Effect of parameter and other variations | ‑6,222 | ‑8,129 | ‑8,587 | ‑8,645 | ‑31,581 | ||||||
| Total variations | ‑6,777 | ‑8,683 | ‑8,898 | ‑8,983 | ‑33,342 | ||||||
| Tax receipts at 2014‑15 MYEFO | 353,594 | 376,604 | 402,792 | 428,579 | 1,561,569 | ||||||
| Changes from 2014‑15 MYEFO to 2015‑16 Budget | |||||||||||
| Effect of policy decisions | ‑3 | ‑554 | ‑226 | 66 | ‑717 | ||||||
| Effect of parameter and other variations | ‑2,139 | ‑5,910 | ‑6,145 | ‑5,883 | ‑20,076 | ||||||
| Total variations | ‑2,142 | ‑6,463 | ‑6,371 | ‑5,817 | ‑20,793 | ||||||
| Tax receipts at 2015‑16 Budget | 351,452 | 370,140 | 396,422 | 422,762 | 1,540,776 | ||||||
The downward revision to tax receipts is primarily driven by declines in prices of key commodities, particularly for iron ore. Between the 2014‑15 Budget and the 2014‑15 MYEFO, the iron ore price fell from around US$95 per tonne FOB (free on board) to around US$60 per tonne. Since the 2014‑15 MYEFO, the price fell to as low as US$43 per tonne, with some recovery in recent weeks. The forecasts in this Budget are underpinned by an iron ore price of US$48 per tonne. Lower international prices for key commodities have been partly offset by falls in the value of the Australian dollar. Weaker expected wage growth since the 2014‑15 Budget has also significantly downgraded expected tax receipts. For more details on the economic outlook, see Budget Statement 2.
Abstracting from policy decisions, tax receipts have been revised down $20.1 billion over the four years to 2017‑18 since the 2014‑15 MYEFO. New policy measures since the 2014‑15 MYEFO are expected to reduce tax receipts by $0.7 billion over the four years to 2017‑18. Significant measures include: continuing the GST compliance program; a tax cut to all small businesses through a 1.5 percentage point tax cut for small companies and a 5 per cent tax discount on income from unincorporated small business activity; expanding accelerated depreciation for all small businesses; and modernising the methods available to calculate work‑related car expense deductions. For more details on revenue and expense measures introduced at this Budget, see Budget Paper 2.
The 2014‑15 Budget provisions for both the 1.5 per cent company levy to fund the Paid Parental Leave Scheme and reduction in the general company tax rate to 28.5 per cent have now been removed.
The 2015‑16 Budget continues to include a provision for the China‑Australia Free Trade Agreement. Consistent with usual practice, this will become a revenue measure when the agreement is signed.