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(Australian Associated Press)
Company taxes will deliver an extra $5.2 billion to federal government coffers over the next four years courtesy of surging commodity prices and a resources sector that remains the powerhouse of the corporate sector.
Revenue from company tax will total $83.5 billion in 2017/18, an increase on the $81 billion forecast in the mid-year economic and fiscal outlook (MYEFO), with the growing profits of Australia’s mining sector driving the growth.
While personal income tax revenue has been the biggest contributor as jobs grow, budget documents state that company tax receipts are expected to have lifted 22.1 per cent in 2017/18 and by 6.7 per cent in 2018/19.
“The strong growth in 2017/18 is driven by increasing profits in the mining sector owing to higher commodity prices over 2017/18,” the budget papers state.
Treasury expects strong commodity prices to continue to boost corporate tax receipts in the upcoming year, but beyond that, higher mining profitability is not expected to fully flow through.
“Some mining companies (particularly liquefied natural gas companies) have accumulated a large stock of losses from previous investments, which can be used to reduce tax payable in the coming years,” the papers state.
For 2018/19, company and resource rent taxes will account for $92.6 billion, or 19 per cent, of a total $486.1 billion in government revenue.
Last year the same taxes accounted for 18 per cent of the smaller $444.4 billion the government took in.
While mining companies remain the strongest drivers of the increase, the budget does note an increase from non-mining companies, consistent with the transitioning economy.
The uplift in company taxes comes as the federal government continues to press for support in the Senate to pass its stalled tax cuts to big businesses.
Treasurer Scott Morrison says while the government has already legislated tax cuts for small and medium sized businesses with a turnover of up to $50 million a year, big business tax cuts are needed for companies to remain internationally competitive.