THE Federal Budget has been labelled a political rather than an economic document that sets the Howard Government up for the upcoming election, likely to be held in the next few months.
THE Federal Budget has been labelled a political rather than an economic document that sets the Howard Government up for the upcoming election, likely to be held in the next few months.
Chamber of Commerce and Industry of WA chief economist Nicky Cusworth said it was “very much a political, pre-election budget”. Ms Cusworth welcomed most of the specific measures but said there was “no evidence of a longer term fiscal strategy”.
“The focus is on the groups that are receiving a benefit of one form or another rather than fitting it into any sort of longer term fiscal strategy,” she said.
Ms Cusworth also expressed concern about the “wafer thin” fiscal surplus next year and the “somewhat optimistic” forecast of 3.5 per cent economic growth in 2004-05.
If growth comes in lower than forecast, the Government may not maintain its surplus.
Premier Geoff Gallop told ABC News he would have liked to see more Federal support for infrastructure development in Western Australia, such as at BHP Billiton’s $1.3 billion Ravensthorpe nickel project.
The budget has sought to ease the paperwork burden facing small business.
Small businesses and non-profit organisations that voluntarily register for GST will be allowed to report and pay GST on an annual basis rather than quarterly or monthly.
This change will reduce the compliance burden for up to 740,000 small businesses and 30,000 non-profit organisations.
The wine industry and the oil exploration industry were among the few sectors to obtain specific assistance.
A tax rebate of $290,000 in wine equalisation tax will be provided to every wine producer on an annual basis.
Treasurer Peter Costello said this would effectively exempt 90 per cent of Australia’s wine producers from WET.
Companies exploring for oil and gas in offshore “frontier areas” will be able to claim a 150 per cent tax deduction.
The budget featured substantial income tax cuts via changes to tax thresholds.
From July 1 2004, the 42 per cent threshold will be increased from $52,000 to $58,000 and the 47 per cent threshold is to be increased from $62,500 to $70,000.
From July 1 2005, the 42 per cent threshold will be further increased to $63,000 and the 47 per cent threshold to $80,000.
To encourage superannuation savings, the Government has boosted its co-contribution scheme for low-income earners who make voluntary contributions.
From July 1 the Government co-contribution will increase to 150 per cent of an employee’s superannuation contribution up to a maximum of $1,500.
In addition, the Government will lower the superannuation surcharge rate by a greater amount than it had previously planned.
The rate will be reduced to 12.5 per cent in 2004-05, 10 per
cent in 2005-06 and 7.5 per cent in following years.
KEY BUDGET MEASURES
- The 42% marginal tax threshold will be lifted from $52,000 to $63,000 over 14 months.
- The 47% threshold is to be increased from $62,500 to $80,000 over 14 months.
- A tax rebate of $290,000 in Wine Equalisation Tax will be paid to every wine producer on an annual basis.
- Certain small businesses will be able to report and pay GST annually, instead of quarterly.
- Increased deductions for petroleum exploration costs in designated frontier areas.
- Superannuation surcharge cut from 14.5% to 7.5% over three years.
- Superannuation co-contributions for low-income earners will be increased.
- Extra funding to upgrade Australia’s road and rail systems confirmed.
- Extra support for outside-school-hours places and family day care places.
- A $107 million program to provide regional Australians with access to higher bandwidth services.
