The days of personal income tax cuts, driven by a rising flood of commodities cash, have gone.
So get used to shouldering a bigger share of government spending through your tax contributions over the next few years.
Deloitte Access Economics economist Chris Richardson says policy has quickly shifted from handing out tax cuts to seeking new ways to repair the government budget.
“As soon as the rivers of gold flowed from mine sites to the coffers in Canberra, they were bundled out into a series of personal income tax cuts,” he says.
There were eight tax cuts in eight years, beginning in 2003-04 and running through to 2010-11.
However, the more recent tax cuts — the carbon tax compensation, a low income offset and the lifting in the bottom tax threshold from $6,000 to $18,200 — will likely be the last we’ll see for some time.
Richardson says: “After falling from 19 per cent of wages in 2004-05 to 15.5 per cent in 2009-10, the average rate of tax has since rebounded.”
Richardson sees a lean time this financial year for the taxman, forecasting revenue from income tax on individuals to be $2.1 billion below official estimates
The following year could see a partial reversal with total tax revenue from individuals $1.2 billion higher than forecasts.
And don’t expect companies, who’ve recently seen profits sag, to make a bigger contribution in the short term.
“Company tax is not the star that it once was,” Richardson says. “Company profits before tax have been in the slow lane for some time, and are still shrinking.”
The profit share from companies has fallen to its lowest in a decade, Richardson says in the Deloitte Access Economics Budget Monitor November 2013.
“That pull back leaves profits well above the levels seen in the 1980s and 1990s but it has been enough to see company tax as a share of revenue on the wane.
“The share of total taxes made up by company tax peaked back in 2008-09, and saw its brief post-GFC (Global Financial Crisis) recovery turn to further falls in 2012-13.”
Deloitte Access Economics forecasts company tax collections in 2013-14 will come in at $69 billion, a gain of just 1.2 per cent or $800 million, on the prior financial year.