Did the 2013 budget share the pain?

Friday, 17 May 2013  Media Alerts

Top takeaways from this article

  • ​Academics from the Australian School of Business at UNSW have given their reaction to the 2013 Federal Budget, in particular to assess if the budget will share the burden across all income levels.
  • Associate Professor Dale Boccabella says “it was always going to be challenging to achieve a fair budget where everyone shares all the pain, in an environment where the budget will be a long way in deficit, rather than the predicted surplus.”
  • “The government is also in a tricky political situation, where if it can’t sell the measure of higher taxes to get good social programs going, maybe we have to cop the second best measure, which is to keep levies and make more use of them. It makes tax much more complex, but achieves the same aims.”
  • Professor Neil Warren from the school of Taxation and Business Law says “up until this budget we’ve been seeing a lot of the action for those at the top end of the income spectrum – those with a lot of super for example. Now it’s moved into the middle: such as for people with children. But interestingly, they’ve not gone for those on the bottom of the income ladder. It’s a halfway story.”
  • “Companies may not be happy. There is more money in the budget for checking up on tax compliance. They want to scare, shock, and awe. It may not bring in the money that is being spent on compliance, but what the ATO seem to be doing here is scare the little fish into paying up by making an example of the big fish. The ATO doesn’t get back the cash it spends on the high profile court cases – but wins by scaring the little players into complying.”
  • “A new budget requirement is that mid-tier businesses pay tax monthly rather than quarterly. A month is pretty quick – and firms will have to pay the tax man, before they get the cash from the credit card company for example. It’s a surprising change, as the government won’t raise any more money from it in the long run,” Professor Warren says.
  • Senior Lecturer Helen Hodgson says the major changes in superannuation taxation will impact affluent retirees. “There is a lowering of tax concessions for those with super investments returning above $100,000 a year. But all this was known before the budget – and I’ve asked my students to consider this as an example of how not to do tax policy. There was so much speculation in March that the industry felt very threatened, so the government had to make all of its superannuation announcements in a rush with little chance for debate.”
  • Senior Lecturer Fiona Martin is disappointed that there wasn’t more tax reform for housing. “The exemption from Capital Gains Tax of the main residence has had the unfortunate effect of increasing house prices in Sydney to the stage where there is now a big problem with a lack of affordable housing. It impacts on the middle classes - we need a big policy initiative about making housing more affordable, and how tax policy can do that.”
  • Dale Boccabella says that while some commentators have been surprised that there is no lowering of the threshold at which people pay GST on imports bought over the internet, such a measure would actually cost the government money. “If you reduce the threshold from $1000 to $300 it would generate $300million in revenue, but it would cost you $700million to collect that. However it’s probably going to be Joe Hockey’s problem next budget, and he will undoubtedly revisit the issue.”
  • Listen back to a podcast which was recorded on the morning after the Federal Budget. In the live round table discussion UNSW academics gave their independent analysis with their reaction to key budget measures.
  • For further comment contact Associate Professor Dale Boccabella on 02 9385 3365, at home on 02 9874 2539 or d.boccabella@unsw.edu.au
  • Media contacts:
    Julian Lorkin: 02 9385 1574 | 0405 805 365 | j.lorkin@unsw.edu.au
    Sarah Lightfoot: 02 9385 9693 | 0478 491948 | s.lightfoot@unsw.edu.au
    Denise Knight (UNSW Media): 02 9385 2864 | 0405 207 685 | d.knight@unsw.edu.au