The Australian Budget yesterday was remarkable for a number of reasons, not only for the fact that they’re one of the first Western countries to return their Government’s books to surplus.
The 2012 Australian Budget institutes a raft of new measures to raise revenues, especially revenues from activities that damage the environment. These new eco-taxes will help balance the Government’s books and shift their economy onto a more sustainable footing. Here’s how:
1. A carbon pricing mechanism
Receipts from the carbon pricing mechanism are expected to be A$24.7 billion to 2015/16. The revenue raised is being recycled used for tax cuts for those on lower incomes and a clean energy fund.
2. Resource Rent Taxes
These include a petroleum resource rent tax and a minerals resource rent tax expected to raise A$31.4 billion to 2015/16. These new eco-taxes recognise the one-off nature of resource extraction and will share the benefits a little more fairly across the country.
3. Cancellation of the company tax cut
The Aussie Government will save A$4.6 billion to 2015/16 by not proceeding with the company tax cut scheduled for the 2013/14 income year. The National Government here cut company tax rates here assuming Australia would follow suit as part of a race to the bottom that we can ever win, as IRD have recently argued (p36).
4. Cutting tax concessions for wealthy Australians
By cutting the tax concessions on superannuation contributions for individuals on income greater than A$300,000 the Australian Government will save A$1.4b to 2015/16 which they can recycle into new saving incentives for those on lower incomes.
Of course, the Budget wasn’t all good news. Education and unemployment benefits were ignored, along with a commitment to the cleantech manufacturing sector. But when you compare this Budget to ours, you start to see how poorly the National Government are managing our economy.
National’s programme of deep cuts to public services, poor quality spending on motorways, and collapsing tax revenues means they’re leaving us vulnerable to further economic shocks. And as for the actual economy, they’re not going to leave it any more resilient or sustainable from when they took office.