Australia Squanders Mining Tax Revenues
July 29, 2013 Taxation in Australia
MELBOURNE – Australia’s budget deficit could deepen in the near future, as the government has squandered extra tax revenues seen over the last ten years.
According to a new report released on July 28th by the independent think tank Grattan Institute, over the last decade the Australian government has “squandered” the extra tax revenues arising from the country’s mining industry.
In the report the Institute noted that over the last ten years record high commodity prices have directly increases in tax revenues by approximately AUD 190 billion.
However, approximately AUD 182 billion of the extra collections was immediately used to fund new government spending, and to implement additional tax cuts and allowances.
The lead researcher of the report Jim Minifie said that the government’s decision to spend the vast amount of collections instead of saving them lacked foresight, and “…the benefit of record commodity prices was treated like recurrent income, and tax cut and spent away as if it would last forever.”
The government’s actions over the last ten years will now have a significant impact on the county’s fiscal balance, as the previously realized benefits were not retained, and any future decrease in commodity prices could lead to a deepening of the budgetary deficit or a cut to public spending.
Photo by digitalmoneyworld