- Related: Guide to the 2018-19 Federal Budget
With the imminent release of the 2018-19 Federal Budget, get up to speed with all the prior announcements “leaked” in the lead-up to Tuesday night’s speech.
Data from the Department of Finance shows the rolling annual deficit is the lowest since 2009 at $14 billion. Company tax revenue is up 23.3 per cent, and personal tax revenue is up 5.4 per cent.
This was driven by higher than expected revenues and lower expenses, putting the country’s finances in its best position since 2009, and giving the government the opportunity to “give back” through tax cuts.
In CommSec’s Economic Insights for April, it makes the case that paying down debt would make savings on interest, but given the tough political time the government is having, buying back some favour is the likely outcome here.
However, the government remains committed to achieving surplus by 2021.
Personal tax cuts
According to Deloitte Economics, personal tax cuts are extremely likely given the nature of bracket creep – as wages rise with inflation, more and more workers are pushed into higher tax brackets.
This is one of the major sources of the increase in tax revenue, so the government will likely announce changes to offset a lot of that pain.
One figure put forward by ANZ economists was roughly $6.50 a week for the average household.
Speaking to Radio National in January, Treasurer Scott Morrison said the government would deliver income tax relief as soon as it could.
- Read more: Small tax cut likely budget centrepiece
Company tax cuts
Not in the budget per se, but small and medium companies with turnover under $50m will be taxed at a lower level in 2018-19.
However, there is still widespread support among business circles for a lower base rate for all companies.
Relief for craft brewers
If there was any doubt this was a political budget, it should all but be removed with Friday’s news that beer would feature in a headline budget announcement. Cheaper beer for all Australians – what’s not to love?
Brewers are currently taxed based on the size of the kegs they deliver their product in, but that will be altered so that smaller kegs, preferred by smaller craft brewers, will be taxed at the same amount.
The alcohol excise refund scheme cap will also be increased to $100,000.
- Read more: Craft beer tax axed in federal budget
Medicare levy increase ditched
Dead, buried, cremated, so to speak. The increase was flagged to help fund the National Disability Insurance Scheme, but given the increased revenue on the budget balance sheet, the government has decided to scrap the increase.
There has been no changes announced to the NDIS.
Hollywood lure
Big-budget filmmakers will get their own slice of budget sweetener, with $140m announced to increase the existing rebate offered as a tax break on films.
Foreign Minister Julie Bishop announced the increased incentive on Friday at the Gold Coast, and was confident it would produce more jobs and projects for film studios.
Infrastructure spending
Infrastructure will also feature heavily in Santa ScoMo’s sack of goodies, with $9b allocated to roads, rail and building.
Among the projects already flagged are $150m for the Bruce Highway and $1b for the M1 in Queensland; $5b for the Melbourne Airport train link, and $3b for West Australian roads, rail and hospitals.
Money for the reef
Included in the budget will be $500m to help restore and protect the Great Barrier Reef, but not everybody’s happy about the largest single investment in our local wonder.
The money has been allocated to help farmers reduce their sediment run-off, as well as improve water quality and fund scientific research.
However, critics have stated the funding does nothing to tackle the real problem – climate change.
