It comes as no surprise - the Government has run out of money. There’s no Family Assistance as pledged by the Government, and likely tax rises and Medicare Levy increases from 1.5% to 2.0%, more cost cutting in the private hospital sector and less spending on Universities.
The Government’s calculation of a mining tax fell well short of its anticipation, and they have clearly mismanaged the economy.
So what can we expect on Budget Night?
There will definitely be less money spent by the Government because they have no money to spend. It is anticipated there will be cuts to education by $2.3 billion, Family Assistance scrapped (a saving of $1.8 billion) and the axing of the carbon price compensation.
But why stop there? Also likely to go will be the fuel tax rebates saving $6.4 billion, the baby bonus ($830 million) and the axing of 20,000 public servants - saving $1.47 billion. The scary thing is that might not be all – “desperate times” call for “desperate measures”. A realignment of the tax scales as we saw in last year’s budget may also be on the cards.
The Goods and Services Tax (GST) may too be targeted. Currently, the rate is 10% but this may rise to 12.5%. This would result in an extra $1.2 billion in revenue for the government based on the GST revenue raised for the 2011/2012 income tax year. ($48 billion)
It is also widely anticipated that there will be a hike in the Medicare Levy from 1.5% to 2.0%, just like the government snuck in the Flood levy on taxpayers in the 30 June 2012 income tax year.
Superannuation reform is likely to be a very hot topic indeed. But rather than simplify the Government’s proposed three tax levels, it is likely to complicate things rather than simplify them.
It is becoming a real concern that this Government has any long term understanding of how the decisions it makes today will affect tomorrow. It is apparent they don’t have the money to fund Australia’s aging population and they want all Australian’s to save for their retirement, but when they do, the Government wants to tax it. If something positive is not done soon, I think most Australian’s will lose confidence in this sector which will open the question as to how will future Governments pay for the future pensioners of Australia?
The countdown now begins to the release of the 2013 Budget.
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