Carbon tax plan to cost $3.5bn

The so-called Tax Expenditures statement tries to quantify tax income lost to concessions, on the basis that concessions often achieve the same effect as direct spending with the same impact.

But they are hard to measure with certainty. Treasury says for some there is not enough data to guess at how much tax would be paid without the concession. For others a mathematical calculation of the tax that would be collected without the concession will overstate its cost because without the concession people will change their behaviour to avoid the tax.

The biggest concessions are the $35.5 billion capital gains tax exemption for the family home, superannuation tax concessions totalling $30.2 billion, the $5.9 billion goods and services tax exemption for food and the $4.7 billion 50 per cent tax discount on capital gains. Treasury says growth in the value of tax concessions has slowed in the past two years because of the impact of the global financial crisis on superannuation returns.

Budget measures also helped. This year the government made less generous the formula to calculate motor vehicle fringe benefits. Worth an estimated $1.2 billion in 2011-12, the concession will cost just half that by 2014-15.

"It's a win for the environment," said Australian Conservation Foundation strategic director Charles Berger. "The new formula should put an end to driving to get up miles."

TOP 10 TAX EXPENDITURES

Capital gains family home exemption $35.5bn

Superannuation concessions $30.2bn

GST exemption for food $5.9bn

Capital gains tax 50 per cent discount $4.7bn

GST financial services concessions $3.8bn

GST exemption for health $3bn

GST exemption for education $2.9bn

Family tax benefit tax exemption $2bn

Tax exemption for private health insurance rebate $1.3bn

Tax exemption for charities $1.3bn

SOURCE: TREASURY, TAX EXPENDITURES STATEMENT