Australia About to See Tax Revenue Drops
April 5, 2011 Taxation in Australia
With less than three months to go in the current Australian financial year, the federal government is being warned to brace itself for tighter financial conditions, as corporate tax revenues are set to be below target for the year.
According to the Australian Treasury, after a year of repeated interest rate increases by the Reserve Bank, continued growth in the exchange rate of the national dollar, and natural disasters both locally and among its major trading partners, Australia is set to see an economic slowdown.
For several years Australia has been successfully avoiding the problems of widening government budget deficits and falling tax revenues, as faced by many foreign governments, but now the country is set to see a measure of financial turmoil, as corporate tax revenues are expected to fall below previous projections. A Treasury minute addressed to the deputy Prime Minister of Australia Wayne Swan, made public over the weekend, shows that corporate tax revenues are expected to total AUD 60.6 billion for the current financial year. Since November 2010 the government was projecting revenues of AUD 63.7 billion, although this figure was in itself a downward revision from the AUD 66.5 billion originally planned at the beginning of the financial year.
Australia’s growing dollar was explained to be a primary reason behind the revenue slowdown, with the country’s prominent mining and resource export sector suffering from increases in the exchange rate. The recent earthquake in New Zealand and continuing disasters in Japan are expected to heavily hamper Australia’s export profits, and the flooding in the country’s Queensland region will prove to be a detractor from production and growth. The newest tax projections are expected to affect the makeup of the upcoming government budget plan, scheduled for release on May 10th, with analysts believing that there will be a heavy cut to government spending.
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