The glory days of Australia’s Budget boom have passed as the outlook is bleak for the economy.
A report by Deloitte projects revenues will fall short of the Budget forecast by $2.3 billion in 2014/2015, and by $7 billion in 2015/2016.
Deloitte said the biggest impact on the Budget in recent months has been renewed write-downs from a “souring” economic backdrop.
“Those costs of a further weakening in the economic backdrop are even bigger than the policy savings the government announced in May, and that the Senate has since largely rejected,” the firm said.
The report also estimates that with the latest round of commodity price falls “hitting taxes with a lag”, the shortfall in profit taxes will reach $4.2 billion in 2015/2016.
However, while most taxes continue to disappoint, spending taxes are increasing.
“Low interest rates are coaxing more spending out of Mr and Mrs Suburbs, and the resultant boost to GST revenues is being supercharged by a healthy pick-up in the pace of housing renovation and construction,” Deloitte said.
“At the same time, the downward lurch in the Australian dollar is pushing up import prices, and hence adding to the take on customer duties.”
Deloitte said this combination of effects leaves spending taxes outperforming official Budget forecasts by $2.7 billion in 2014/2015 and $2.6 billion in 2015/2016.