Published monthly financial statements show that, on an annual basis, the Government has firmly moved into a budget surplus. On an annualized basis, Individual tax receipts are growing at 13% pa, and company tax receipts are growing at 17% pa.
Despite a slowdown in receipts through Covid, from January 2020 to April 2023, total revenue has increased $150 billion, from $497 billion to $647 billion or 30%. Interestingly, Gross Domestic Product (seasonally adjusted, chain volume measures) only increased by 7.6% between December 2019 and March 2023.
As the significant inflation has pushed up wages, so too has the effects of bracket creep been felt. As Parliament ponders whether they will pass the stage 3 tax cuts, the burden of budget repair falls onto the shoulders of the average consumer. So, the Government is clearly in fiscal contraction – Government surplus equals private contraction. Also, the increased mortgage interest rates are deep into the consumer pockets, shifting more money from have-nots to the have-too-much.
And if that wasn’t enough of a burden, the State Governments have nominated the consumers and businesses to pay off the “Covid Credit card”. Think of the 1% increase in payroll tax for companies with payrolls over $10m and the increases in land taxes for those that own investment properties.
To give the appearance of a growing economy, the Government has a Permanent Migration program of 190,000 people for 2023-24. There are no plans on how the increased population can be housed, with vacancy rates below 1.5% across the country. The GDP figures released on the 7th of June 2023 showed that GDP per capita contracted by .2% in the March 2023 quarter. In a fallacy of composition, we have a growing economy, but we are getting individually poorer.
Michael Cornips is the Managing Director and Founder of Emerald Financial.
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