CONSUMPTION spending is set to rebound after last year’s economic slowdown, generating a $13 billion boost to GST tax collections over the next five years, the Treasurer, Wayne Swan, revealed yesterday.The federal government told its state counterparts last week that Treasury was now forecasting that the GST would raise $255.5 billion over the five years from 2009-10 to 2013-14, an increase of $13 billion, or 5 per cent, over its last forecasts in November.The government will not release its economic forecasts until it hands down the budget next month but the boost to GST revenues implies that Treasury now expects consumption spending on items covered by the tax to rise by at least 8 per cent in nominal terms in 2010-11.That is a sharp increase from the 3.5 per cent Treasury was forecasting when it released its midyear budget update in November.In his weekly economic note, Mr Swan said the boost to GST revenues was coming because the government’s economic stimulus measures had ”kept customers coming through the doors of businesses and boosted confidence, which has supported a more sustained pick-up in consumption”.”That means another $2 to $3 billion more funding we will provide to the states each year as part of the dividend of keeping our economy growing through the global recession.”The federal government collects the GST but passes all of the revenue to state governments.Mr Swan played down the impact of the economic recovery on the government’s bottom line, saying that the main sources of federal revenue were not bouncing back as strongly as the GST.”The weakness in business profits and income growth, and the accumulated losses that built up during the downturn, mean that there is a significant lag between the rebound in the real economy and the recovery in Commonwealth revenues like company tax, capital gains tax and personal income tax,” Mr Swan said.In a separate interview on Channel Nine, Mr Swan said the government would seek to bring the budget into surplus as quickly as possible rather than splashing out with electorally popular new spending measures in the May 11 budget.”This won’t be a typical pre-election budget, the likes of which [former prime minister] John Howard used to deliver,” he said. ”This budget will be underpinned by strict fiscal discipline.”The Treasurer also called for a ”mature” discussion of tax reform when the government released the tax review it commissioned from the Treasury secretary, Ken Henry.
Nanjing Night Net