Although full details of Australia’s Federal Budget are to be officially handed down on the evening of May 3, there is much about its contents already available that you should know.
“The budget I’ll hand down … is a national economic plan,” treasurer Scott Morrison told the ABC.
As his first pitch to voters ahead of a July 2 election, it is a crucial one.
What is unlikely to change
From what’s been revealed most recently, it is unlikely there will be a change to the 10 per cent goods and services tax (GST)… At least not while the Coalition Government is in power.
Prime minister Malcolm Turnbull is ruling out changes to negative gearing to raise more money. He has also removed the idea that the states will get the power to raise their own taxes.
According to Deloitee Access economics, Australia is not gathering enough tax to cover the cost of government programs. It estimates the cash deficit will be approximately $41.7 billion for 2015-16.
But Moody’s Investor Services says the Government will struggled to balance the budget by 2021, which creates an impact on the country’s AAA rating, if it does not attend to revenue measures.
“We need to ensure our tax system is sustainable and we make sustainable changes to the tax system, so it can support the needs that are there in the future,” Morrison says, highlighting that this budget will seek to “deal with the loopholes” and those taking “a lend of the system”.
What might change
There are likely to be changes to income tax and this should benefit middle income earners, by lifting the $80,001 mark above which each dollar earned gets taxed 37 cents.
With a $2 trillion superannuation stockpile, which grows through the compulsory contributions we are all making, governments continue to see this as an option to be touched.
What could happen is a lowering of the income level at which concessional superannuation tax doubles from 15 per cent to 30 per cent. Currently those earning $300,000 a year pay 30 per cent on their contributions, but the Government is considering dropping this to an annual $180,000 that would contribute to at least $2 billion a year.
While the treasurer has ruled out taxing capital gains tax in super funds, there is a possibility introduce measures to restrict ‘transition to retirement’ products.
Morrison has also flagged changes to welfare and health spending. He recently told the Business Council of Australia that the budget will “invest in health and social services, in a fairer and more sustainable way that taxpayers can afford”.
This includes a $2.9 billion investment into state-run hospitals over the years to 2020, which was made by the Turnbull Government at the Council of Australian Governments (COAG) meeting in April.