The Australian Federal Government's hopes of delivering a surplus this financial year have been dealt a hefty blow by the slowing world economy, with tax receipts in October A$3.9 billion weaker than forecast in the budget.
New figures published today show the federal coffers were hit hard by a plunge in commodity prices, which caused the budget balance to deteriorate by near A$3 billion.
While the mining tax appears to have raised some revenue – contrary to media reports – it is understood the weakness in tax receipts was more severe than the government had forecast in its recent mid-year budget review.
In October, the month in which the government received its first instalment of company taxes from the September quarter, tax receipts were A$3.9 billion behind where the government had forecast in May.
Government spending was also weaker than expected, but this was not enough to prevent the budget balance weakening to a deficit of A$12.3 billion, about A$3 billion worse than forecast.
A partner at Deloitte Access Economics, Chris Richardson, said the figures showed a significant blow-out in the gap between the budget forecasts and actual tax collections.
''October was the month in which China's slowdown started to bite the budget,'' Richardson said.
''Although it's still not impossible to get a surplus, there's a clear gap there, and the government would have to make a bunch of decisions pretty fast, or pull the plug. That choice is now looming large and probably coming soon.''
The figures also provide the first clues as to how much mining tax was paid during its inaugural September quarter.
Resource rent taxes – which include the mining tax and the petroleum resource rent tax – raised A$500 million in the month, up from A$213 million in September.
The increase is likely to have been driven by the mining tax, but the government is not specifying how much mining tax was raised in order to protect the confidentiality of taxpayers.
The financial statements are not directly comparable with the mid-year economic and fiscal outlook, published in October, but it is understood the slump in revenue is weaker than expected within the government.
- Sydney Morning Herald