TREASURER Wayne Swan has declared he will need to find another $10 billion in savings over the next two years to fulfil Labor's promise to return the federal budget to surplus.
Amid final preparations for tomorrow week's budget, Mr Swan said yesterday that projected revenue had collapsed by $5 billion for each of the next two financial years.
The Age believes that only $2 billion of the $5 billion shortfall is due to weaker-than-expected company tax collections. Another $1 billion is due to weak collections from superannuation funds since a downturn in the sharemarket. A further $750 million is due to weaker-than-expected customs and excise duties on alcohol, tobacco and fuel.
Mr Swan, appearing on Channel Ten's Meet the Press, said he would do all within his power "to protect low and middle-income earners", confirming that earners on $300,000 or more would have their superannuation contributions taxed at 30 per cent rather than at the present highly concessional 15 per cent.
"We have got to make sure superannuation concessions are distributed fairly . . . and in a budget where we are looking for savings, it's important to run your ruler over a whole range of tax expenditures to make sure that they are directed to the right areas," he said.
Mr Swan will also tighten so-called living-away-from-home allowances under which executives hired from overseas or interstate receive large tax-free sums to compensate them for "living away from home".
From July 1 they will have to prove they rent or own a second home to claim such an allowance and it will be limited to a period of one year. Fly-in fly-out workers in the mining industry will be allowed to continue to claim the allowance.
Four leading public health bodies have written to Prime Minister Julia Gillard asking for a crackdown on alcohol tax concessions as a way of stemming the tide of alcohol-related deaths and injuries and saving $1.5 billion a year.
The Australian Medical Association, the Cancer Council, the McCusker Centre for Action on Alcohol and Youth and the Foundation for Alcohol Research and Education say taxing wine by volume at the rate applying to beer would save more than $1.5 billion and would stop the leakage of concessions to New Zealand wine makers now claiming them as part of the Closer Economic Relations agreement.
"We are aware that the government has previously declined to act in this area, arguing that it will not act in the middle of a wine glut and where there is an industry restructure under way," the letter says. "However, research shows the current alcohol taxation arrangements actually contribute to the increased availability of very cheap wine and action is urgently required."
Businesses taking part in the Treasury's liaison program report "strong demand" in the resources sector, a "challenging" environment in the retail sector and "difficult" conditions in manufacturing.
Frequently Asked Questions about this Article…
Why does Treasurer Wayne Swan say he needs to find another $10 billion in savings?
Wayne Swan said the government needs to find about $10 billion in savings over the next two years to help return the federal budget to surplus. He cited a collapse in projected revenue of roughly $5 billion for each of the next two financial years as the reason this extra saving is required.
What caused the $5 billion revenue shortfall in each of the next two years?
The article reports the $5 billion shortfall is largely from weaker-than-expected tax and duty collections: about $2 billion from lower company tax receipts, $1 billion from weaker superannuation fund returns after a sharemarket downturn, and roughly $750 million from reduced customs and excise duties on alcohol, tobacco and fuel.
How could the budget savings measures affect everyday investors and their superannuation?
The Treasurer said he will try to protect low- and middle-income earners, but everyday investors should note proposed changes that target concessions. For example, earners on $300,000 or more would face a higher 30% tax on superannuation contributions instead of the current 15%, which could affect higher-income members' retirement balances.
Will low- and middle-income earners be protected from new budget cuts?
Wayne Swan publicly confirmed he intends to do all within his power to protect low- and middle-income earners as the government looks for savings to return the budget to surplus.
What change is proposed for superannuation contributions for high earners?
The article states that people earning $300,000 or more would have their superannuation contributions taxed at 30% rather than the current concessional rate of 15% as part of efforts to make superannuation concessions fairer.
What are the changes to living-away-from-home allowances and who can still claim them?
From July 1, executives claiming living-away-from-home allowances will need to prove they rent or own a second home and the allowance will be limited to one year. Fly-in fly-out (FIFO) workers in the mining industry will still be allowed to claim the allowance.
What are public health groups asking the government to do about alcohol tax concessions?
Four leading public health bodies have written to Prime Minister Julia Gillard asking for a crackdown on alcohol tax concessions. They argue taxing wine by volume at the same rate as beer would save more than $1.5 billion a year and reduce concession leakage to New Zealand winemakers under the Closer Economic Relations agreement.
What does the Treasury liaison program say about demand across industry sectors?
Businesses in Treasury’s liaison program reported 'strong demand' in the resources sector, a 'challenging' environment in the retail sector, and 'difficult' conditions in manufacturing, according to the article.
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