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1987 Tax expenditures statement



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TREASURER

PRESS RELEASE NO. 2

EMBARGO IMMEDIATE RELEASE 8 JANUARY 1988 COMMONWEALTH PARLIAMENTARY LIBRARY C. |. s.

V.Y |

STATEMENT BY THE ACTING TREASURER, THE HON. CLYDE HOLDING, MP .

1987 TAX EXPENDITURES STATEMENT

Today, I announce the publication of the 1987 Tax ,

ExpendiLures Statement.

Tax expenditures are those provisions of the taxation law

which pr ovide preferential treatment, with wespec t to a

chosen benchmark tax structure, to certain classes of

taxpayers or to particular types of activity. The benchmark

Lax structure is selected primarily on 1 lie criterion of

neutral taxation treatment of similarly placed activities or

classes of taxpayer. By reducing or delaying the receipt of

taxation revenue, tax expenditures represent a call on the

Budget similar to direct outlays. The aim of the Tax

Expenditures Statement is to allow tax expenditures to be

subjected to public scrutiny in a manner· similar to that for

direct outlays. The inclusion of a particular item in a list

of Lax expenditures should not, of itself, be taken to imply

a judgement on the merit of its place in the tax system.

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2

A Tax Expenditures Statement was published for the first time

in 1986. This provided comprehensive information on the

extent and cost to revenue of tax expenditures identified

under the income tax, the interest withholding tax, the

dividend withholding tax, certain excise and customs duties,

the debits tax (then known as the bank account debits tax)

and the departure tax.

The 1987 Tax Expenditures Statement updates Lite costings

provided in the 1986 statement and extends its coverage to

include tax expenditures identified under the fringe benefits

tax and under the new substantiation rules for

employment-related expenses.

As in 1986, tax expenditure items are classified on a

functional basis consistent with the Budget presentation of

direct outlays. This is to assist comparisons of the level

of assistance provided through the tax system to particular

types of economic activities with that provided by direct

outlays.

The statement provides estimates of the cost to revenue of

tax expenditure items for the income years 1983-84 to 1986-86

(to 1986-87 for excise duties and the departure tax).

However', for' many items, while the nature of the tax

expenditure can be identified, a costing is either not

feasible or not currently available.

The costings for individual tax expenditure items cannot

strictly be aggregated to determine the total level of

assistance provided through tax expenditures. For example,

the statement does not cover tax expenditures under the sales

tax and, as noted above, for- many items listed, no estimate

could be provided of their cost to the revenue. However, the

overall level of assistance is substantial; for the items

that could be costed, the revenue forgone totalled $8.4

billion for- 1935-86, compared with a total cost for direct

outlays of $69.9 billion. The total revenue forgone iri

1985-86 is higher- than the $7.5 billion estimated for

1984-85, mainly accounted for by growth in the cost of some

existing tax expenditure items. The cost of many individual

tax expenditures, however, lias fallen as a- result of tax

reform measures.

Copies of the 1^87 Tax Expenditures Statement will be

available soon for- purchase at AGPS bookshops.

8 January 1988

CANBERRA

Contact: Treasury Department, Mr Alex Dolan - 633827

(business), 541233 (home).