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Tuesday, 15 August 1972
Page: 91

The transfer of pay-roll tax to the States as from 1 September 1971 has resulted in a loss to Commonwealth revenues from that date and affected the increases in budget revenues. The transfer of pay-roll tax was accompanied by a reduction in financial assistance grants payable to the States. Details of the arrangements relating to the transfer of pay-roll tax are set out in the document 'Commonwealth Payments to or for the States 1972-73' presented concurrently with the budget and the effects of the transfer on year-to-year comparisons of revenue are discussed in Statement No. 7.

On the basis of existing legislation and in the absence of any changes in existing taxes and other charges, it is estimated that total receipts in 1972-73 would amount to $9,881,775,000 which would be $1,036,379,000 or 11 .7 per cent more than total receipts in 1971-72.

Details of the estimated effects on receipts in 1972-73 and in a tutt year of the revenue proposals announced in the Budget Speech are shown in the following table.

After taking these revenue proposals into account, total receipts in 1972-73 are estimated at 59,447,465,000, an increase of $602,069,000 or 6.8 per cent. In 1971-72, total receipts increased by $815,167,000 or 10.2 per cent. The transfer of pay-roll tax to the States is estimated to have reduced receipts by $253,169,000 in 1971-72.

The following table compares estimated receipts in 1972-73 with actual receipts in the two preceding financial years. wilh 1971-72 figures and tbe estimates for 1972-73.

Taxation Revenue

In 1972-73 total taxation revenue is estimated to increase by $556,573,000 or 7.1 per cent, to $8,400,500,000. The main changes in estimated taxation collections are discussed in the following notes.

Customs Duty.On the basis of existing legislation, collections of customs duty are estimated to increase by $57,121,000 to $525,000,000. This estimate allows for an increase in the value of recorded imports in 1972-73 and for an increase in the proportion of imports dutiable at higher rates.

Excise Duty,etc. The estimate of excise duty collections assumes that consumer spending will increase more strongly in 1972-73 than in 1971-72. Allowing for the minor measure announced in the Budget Speech, collections are estimated to increase by $71 ,014,000 or 5 . 9 per cent to $1 ,283,020,000- the full year effect of the reduction in excise duty on wine, announced in May 1972, is reflected in this estimate. The increase in collections in 1971-72 of $158,702,000 or 15. 1 per cent, included the effects of increases in excise duty rates in that year.

Sales Tax.The estimate of sales tax collections in 1972-73 assumes that the sale values of most goods subject to sales tax will increase more strongly in 1 972-73 than they did in 1971-72. On the basis of existing legislation, it is estimated that sales tax collections will increase by $54,1 99,000 or 7 . 9 per cent to $737,000,000, following an increase of $49,642,000 in 1971-72. The effect of the proposed exemption from sales tax of works of art will be to reduce collections in 1972-73 by an estimated $480,000 to $736,520,000.

Income Tax- Individuals.It is estimated, on the basis of a 2| per cent levy for 1972-73 and other provisions of existing legislation, that net collections of income tax from individuals in 1972-73 would increase by $871,416,000 or 23.1 per cent to $4,640,000,000. The measures announced in the Budget Speech are estimated to reduce income tax collections from individuals by $432,200,000 in 1972-73. Thus after allowing for these changes, net income tax collections from individuals are estimated to increase by $439,216,000 in 1972-73.

(a)   Pay-as-you-earn Instalment Deductions.On the basis of an on-going levy of 2$ per cent and other provisions of existing legislatic n, gross pay-as-you-earn instalment deductions in 1972-73 are estimated at Ki 60,000,000 or $667,934,000 more than in 1971-72. For the purpose of estimating pay-as-you-earn collections, an increase of 9.0 per cent has been assumed as the increase in average earnings for 1972-73. This assumption, which takes account of the rise in average weekly earnings which has already occurred, does not imply that the trend in earnings from this point of time can be forecast with reliability. Nor does its use imply that it is a budget objective. The increase in the average number of employees in 1972-73 in terms of 'male units' is assumed to be 2 . 0 per cent, a little above that experienced in 1971-72.

Refunds of pay-as-you-earn instalment deductions are estimated to decrease by $83,519,000, one factor being the effect of the variations made to tax instalment schedules during the 1970-71 and 1971-72 financial years. Net pay-as-you-earn collections, before taking account of the proposals outlined in the Budget Speech, are therefore estimated to increase by $751,453,000 to $3,640,000,000 Allowing for the new taxation measures the estimate is $3,278,000,000, an increase of $389,453,000.

(b)   Other.On the basis of existing legislation and provisional tax including a levy of 2$ per cent in 1972-73, collections on assessments of individuals are estimated to increase by $119,963,000 to $1,000,000,000. The overall increase in 1971-72 incomes, other than wages and salaries, reflects a recovery of about 18.0 per cent in the business incomes of primary producers during 1971-72. The incomes of other individuals subject to provisional tax are estimated to have increased by 6.6 per cent in 1971-72. These 1971-72 incomes are, of course, subject to tax in 1972-73. After allowance is made for the effects of the new income tax measures, collections on assessments of individuals are estimated to amount to $929,800,000 in 1972-73.

Income Tax - Companies.Incomes of companies in 1971-72, which are subject to tax in 1972-73, are estimated to have increased by 3.2 per cent, following an increase of 1.9 per cent in 1970-71. Collections of income tax from companies in 1972-73 are estimated at $1,300,000,000, an increase of $22,518,000.

Pay-roll Tax.Pay-roll tax collections are estimated to decline by 593,570,000 in 1972-73. Pay-roll tax ceased to be levied by the Commonwealth on wages and salaries paid in the States on and after 1 September 1971. The estimated collections of $5,500,000 in J972-73 therefore relate mainly to pay-roll tax on wages and salaries paid in the Australian Capital Territory and the Northern Territory.

Estate Duty.On the basis of existing legislation, it is estimated that collections ot estate duty will increase by $2,794,000 to $70,000,000 in 1972-73, following a decrease of $2,867,000 in 1971-72. The changes in the relevant provisions as announced in the Budget Speech are estimated to have a cost to revenue in 1972-73 of $3,000,000, reducing collections to $67,000,000.

Gift Duty.Gift duty collections in 1972-73 are estimated, on the basis of the present legislation, at $8,500,000. The changes in gift duty legislation announced in the Budget Speech are estimated to reduce collections in 1972-73 by $400,000 to $8,100,000.

Stamp Duty (A.C.T.and N.T.). At existing rates, stamp duty revenues in the Territories are estimated to total $3,360,000 in 1972-73, an increase of $641,000. The gain to revenue in 1972-73 of the proposed change in the A.C.T. stamp duty provisions announced in the Budget Speech is estimated at $200,000. This estimate is based on the assumption that the new rates will apply as from 1 November 1972.

Other Revenue

(a)   Some of the figures for 1970-71 have been adjusted for accounting changes to place them on a basts comparable with 1971-72 figures and the estimates for 1972-73.

Other revenue is estimated to increase by 845,247,000 in 1972-73. Brief explanations of the larger variations are contained in the following notes.

Civil Aviation

Qantas Airways Limited- Dividend.Dividend receipts are estimated to be 52,955,000 less, there being no provision for the receipt during 1972-73 of a dividend in respect of the company's 1971-72 financial year.

Air Navigation Charges.Collections are expected to increase by 33,703,000 as a result of growth in air traffic, the lifting of weight restrictions on aircraft at certain airports, and the increase in charges announced in the Budget Speech which is estimated to yield $800,000 in 1972-73.

External Territories

The estimated increase of $2,602,000 reflects the net effect of the sale to the Papua New Guinea Investment Corporation of the shares in Commonwealth New Guinea Timbers Ltd., which were previously held by the Commonwealth, and the consequent discontinuation of dividend receipts from that company in 1972-73.

Interior

In 1971-72, Navy land at Woolloomooloo, N.S.W., valued at $16,700,000 was transferred to the Department of the Interior. No similar transaction is expected in 1972-73 and this is the major factor accounting for the net decrease of $16,191 ,000 in Interior revenues. Revenue for services provided by the Bureau of Meteorology is estimated to increase by $604,000.

Labour and National Service

Stevedoring Industry Charge.The proceeds of the Stevedoring Industry charge are paid to the Australian Stevedoring Industry Authority. The estimated increase of $3,703,000 in 1972-73 reflects the full year impact of increased charges effective from February 1972.

National Development

Snowy Mountains Hydro-electric Authority - Interest and Principal.Receipts of interest and repayments of principal from the Snowy Mountains Hydro-electric Authority are estimated to increase by $6,708,000 and $1,559,000 respectively in 1972-73 mainly as a result of bringing to account certain capital expenditure relating to the Tumut 3 project.

Postmaster-General's

Broadcasting and Television Licence Fees.The estimated increase of $5,291,000 in 1972-73 includes additional revenue of $5,215,000 from broadcasting listeners' and television viewers' licence fees, the rates of which were increased from 1 October 1971.

Primary Industry

Rural Reconstruction- Interest.The estimated increase of $1,852,000 reflects the full year effects of the substantial repayable advances made last year and the further increase in such advances expected in 1972-73.

Shipping and Transport

Commonwealth Railways- Net Receipts.Net receipts from Commonwealth Railways are estimated to increase by $2,576,000 in 1972-73. Gross receipts are expected to be $3,460,000 greater than in 1971-72 as a result of traffic growth and increases in some freight rates. Working expenses, however, are expected to increase by $884,000 mainly as a result of higher wage and salary payments.

Other.The estimated increase of $1 ,696,000 in 1972-73 reflects a projected increase in light dues of $872,000, which is mainly attributable to increased charges announced in the Budget Speech. Loan interest payable by the Australian Coastal Shipping Commission is expected to increase by $626,000 in 1972-73.

Treasury

Reserve Bank.Consolidated Revenue Fund receipts from Reserve Bank profits are estimated to decrease by $18,170,000 in 1972-73 reflecting certain consequences of changes in international currency values.

Post Office - Interest on Capital.It is estimated that because of the increase in capital advanced to the Post Office, interest received from the Post Office will rise by $18,158,000 in 1972-73.

Repayments of Principal - Australian National Airlines Commission and Qantas Airways Limited.Repayments of principal by the Australian National Airlines Commission are estimated to increase by $1,877,000 in 1972-73 while repayments by Qantas are estimated to be $3,661,000 greater, relating principally to loans drawn in 1971-72 for aircraft and equipment purchases.

Interest on Wheat Board Advances.Interest receipts on funds advanced to the Australian Wheat Board are estimated to decrease by $2,837,000 because of an expected decline in the average advance outstanding to the Wheat Board in 1972-73.

Superannuation Contributions by the Australian National Airlines Commission.The estimated receipts of $21,000,000 from the Commission in 1972-73 represent payments under an arrangement expected to be entered into between the Treasurer and the Commission in terms of Section 145 of the Superannuation Act 1922-1971, in respect of the Commission's accruing liability under that Act.

Other.The estimated increase of $11,542,000 is attributable largely to increased interest and principal repayments on various advances to the States. The larger increases include $3,500,000 and $2,000,000 respectively for repayments of special advances made to N.S.W. and Victoria; $3,102,000 from Tasmania relating to hydro-electric power development assistance; and $1,927,000 from South Australia in respect of natural gas pipeline assistance.

Works

Revenue is estimated to increase by $1,553,000 in 1972-73 due mainly to the sale of some Department of Works assets in Papua New Guinea to the Administration in accordance with agreed arrangements for the transfer of functions. There will be an offsetting element in the form of a special Commonwealth grant to Papua New Guinea to facilitate the acquisition of these assets by the Administration.

Army

Receipts are estimated to decline by $2,058,000 in 1972-73 mainly because disposals and sales of stores are expected to be much lower than in 1971-72. In addition, revenue in 1971- 72 included $500,000 on account of imprest advances repaid following the withdrawal of the Vietnam force.

Air

The main reason for the decline of $1,812,000 in estimated receipts in 1972-73 is that revenue in 1971-72 included a compensation payment of $1,680,000 on account of an Orion' P3B aircraft destroyed in the U.S.A. in 1968. No similar receipt is expected in

1972- 73.

Supply

Other.The estimated decline of $3,543,000 in other revenue is attributable mainly to an expected reduction in the proceeds of disposals sales in 1972-73.

Territories

Northern Territory.It is estimated that revenue from the Northern Territory' will increase by $3,320,000 in 1972-73, including increases of $1,065,000 from electricity supply, $1,098,000 from health services and $612,000 from miscellaneous items.

Receipts of National Debt Sinking Fund

Details of the estimated receipts of the National Debt Sinking Fund are shown in the following table.

(a)   Excludes profits or losses from realization of investments. In 1970-71, profits from realization of investments amounted to 8215,000 while in 1972-73 losses are estimated to amount to $334,000. There was no sale of securities in 1971-72. (o) Excludes repayments of advances from the Australian Wheat Board.

Commonwealth

Contribution from Consolidated Revenue and Interest on Investment.The National Debt Sinking Fund Act 1966-67 provides for contributions each year from the Consolidated Revenue Fund to the National Debt Sinking Fund equal to 4 per cent of the net debt of the Commonwealth liable to these contributions as at the previous 30 June. The amount payable from revenue is reduced by income earned from investments after allowing for any profit or loss on the sale of securities. Net Commonwealth debt on which the 4 per cent contribution is calculated increased by $96,521,000 during 1971-72 and the gross percentage contribution is therefore estimated to increase by $3,861,000 in 1972-73. After allowing for a loss on the realization of maturing securities of $334,000, the reduction in investment income is estimated to be $291,000 and the estimated net increase in the contribution from Consolidated Revenue is $4,152,000 for 1972-73. In 1971-72, $25,000 was paid into the Sinking Fund under the provisions of Section 11 of the Act.

Repayments of Loan Fund Advances for Housing.Repayments to the Sinking Fund of advances to the States under the various Housing Agreement Acts are estimated to be $628,000 greater in 1972-73. Repayments will increase until the maturity of the loans, because of the credit foncier basis applied to the combined repayment of principal and interest.

Receipts in Respect of State Debt

Contributions by Commonwealth and States.In accordance with the Sinking Fund requirements of the Financial Agreement concerning State debt, contributions from revenue by the Commonwealth and States on State debt are estimated to increase by $7,749,000 in 1972-73.

Net Increase in Other Balances of the Commonwealth in the Trust Fund The net increase in other balances of the Commonwealth in the Trust Fund in 1972-73 is estimated to be $12,351,000 less than the increase in 1971-72, due largely to a turnaround of $7,011,000 in the net movements in the balances of Army and Supply Trust Accounts and a fall of $1,188,000 in interest on investments held in the Loan Consolidation and Investment Reserve.







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