Reliance on GST grows as company tax revenue hits five-year low



Powered by article titled “Reliance on GST grows as company tax revenue hits five-year low” was written by Gareth Hutchens, for on Tuesday 1st November 2016 08.06 UTC

Australian governments are relying increasingly on consumers for tax revenue, as company tax collections record their lowest level in five years.

The Australian Tax Office’s annual report shows the gap between collections from company tax and the goods and services tax has declined from $20bn in 2011-12 to just $5bn in 2015-16.

The Turnbull government is pushing parliament to support its $48bn 10-year company tax cut plan.

The ATO figures, released on Tuesday, show consumers paid $46.2bn in GST in 2011-12 and $57.5bn in 2015-16.

By comparison, company tax collections grew slightly between 2011-12 and 2013-14, from $66.6bn to $67.3bn, but fell to $66.9bn in 2014-15 and $62.6bn in 2015-16.

It means the gap between company tax collections and the GST take has shrunk from $20.4bn to $5.1bn.

The ATO said the fall in company tax collections over the past year could largely be blamed on a decline in commodity prices, which flowed through to weak growth in company profits and capital gains.

It said the federal government’s small business package, and lower collections from bringing forward the monthly pay-as-you-go instalment measure, also weighed on company tax collections.

The fall in company tax receipts over the past 12 months contributed to a decline in expected net tax collections.

The ATO said net tax collections were $5.8bn higher in 2015-16 over the previous year, but were $14.5bn (4.1%) below the amount expected at the time of last year’s budget.

In contrast, GST collections were up 5.4% on the previous year, due in part to strong growth in dwelling investment.

On the same day as the ATO’s annual report, the Reserve Bank kept the official interest rate at 1.5%, citing record-low inflation and wages growth.

The statement accompanying the RBA’s decision said household consumption had been growing at a reasonable pace, but appeared to have “slowed a little recently”.

“The large decline in mining investment is being offset by growth in other areas, including residential construction, public demand and exports,” the RBA governor, Philip Lowe, said in a statement on Tuesday.

“Subdued growth in labour costs and very low cost pressures elsewhere in the world mean that inflation is expected to remain low for some time.” © Guardian News & Media Limited 2010

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