Treasurer Josh Frydenberg has, as the saying goes, been hit in the arse with a rainbow — a colossal windfall of revenue that will increase federal coffers by tens of billions of dollars over coming years.
Behold the rainbow: for the current fiscal year, an extra $22 billion in tax receipts compared to what the government estimated in the Mid-Year Economic and Fiscal Outlook (MYEFO) in December. For the budget years 2022-24, an extra $40 billion in tax receipts (despite the cut to fuel excise). In 2023-24, an extra $34 billion; the following year, another $27 billion. Plus, in the new budget out-year of 2025-26, a prediction of a monster $598 billion in tax receipts.
No government has ever enjoyed such massive surges in predicted revenue. Where’s it coming from? “Parameter variations”, meaning stronger than previously forecast economy and business conditions. The detailed breakdown that’s available for the next two years shows individual income tax revenues up by $7.5 billion this year and again in 2022-23, then another $36 billion over 2023-24 and 2024-25. Company tax is up by an extra $6 billion this year and $8 billion in 2022-23. Higher gas prices will see the petroleum rent resource tax finally return to levels of two decades ago, with a billion dollars extra each year from next year.
This surge in revenue means that the government’s already feeble “low taxes” narrative is rendered even more absurd. According to the MYEFO, the government was going to take 21.4% of GDP in taxes in 2022-23. Even with the temporary fuel excise cuts, the government will be taking 22.1% of GDP (a figure previously not forecast to be reached until 2025), and now forecasts it will be taking nearly 23% in 2026.
Under Labor, the tax-to-GDP take averaged less than 21%. And yet, amazingly, we’ll still be in deep, deep deficits in the mid-2020s. This isn’t just a high-spending government, it’s a high-taxing government. But we’re getting no fiscal benefit from it.
