Company tax revenues lift: Craig James

The Department of Finance released the March monthly financial statements on Friday.

 

This note examines the latest data.

Budget improves: In the twelve months to March 2017, the Budget deficit stood at $38.6 billion (around 2.3 per cent of GDP), up from $37.53 billion deficit in the year to February but better than the average deficit over the past year of $39.3 billion. Average growth in company tax revenues in the last three months has been the best in 41⁄2 years.

Lower-than-expected deficit: The Department of Finance says the “the underlying cash balance for the financial year to 31 March 2017 was a deficit of $38,907 million, which is $1,361 million lower than the 2016-17 Mid-Year Economic and Fiscal Outlook (MYEFO) profile deficit of $40,267 million.”

 

The Federal Budget remains on track to meet Government forecasts. Not only are rolling annual aggregates showing improvement, so are the so-called ‘profile’ positions estimated by the Department of Finance.

 

The Government continues to exercise spending restraint. In fact expenses or payments were $1.5 billion below the so-called ‘profile’ level or government estimates for this point in the year. Revenue also is lifting, $335 million above government forecasts. And the rolling annual level of revenues is growing at a 6.2 percent annual pace, faster than growth in payments for the 23rd straight month.

 

 

The Budget is currently in a stronger position than the government’s finance boffins have estimated. The good news is that improvement is coming from both sides of the balance sheet.

 

GST revenues are also lifting, currently at record highs for a 12-month period. Spending is growing faster than the growth rate of retail trade suggesting that businesses and service sectors are doing better than goods-dependent operations.

 

What do the figures show?

 

The underlying Budget deficit for the twelve months to March 2017 stood at $38.6 billion (around 2.3 percent of GDP), up from $37.53 billion in the year to February.

 

Smoothed revenues (twelve months to March) were up 6.2 percent on a year ago just down from 6.3 percent in January which was the fastest growth in 42 months.

 

Expenses rose by 4.3 percent over the same period.

 

In terms of the fiscal balance, the Department of Finance noted: “The fiscal balance for the year to 31 March 2017 was a deficit of $37,365 million, which is $6,381 million lower than the 2016-17 MYEFO profile deficit of $43,746 million. The difference results from higher than expected revenue and lower than expected expenses.”

 

Revenues: “Total receipts were $334 million higher than the 2016-17 MYEFO profile.”

 

Expenses: “Total payments were $1,516 million lower than the 2016-17 MYEFO profile.”

 

The Government currently expects an underlying deficit of $36.514 billion for 2016/17 (around 2.3 per cent of GDP).

 

Receipts from the Goods and Services Tax stood at a record $62.0 billion in the twelve months to March, up 5.7 percent on a year ago, and above the 5.4 per cent growth over the last twelve months. The Government has forecast GST receipts of $62.41 billion for the entire 2016/17 year.

 

Actual GST receipts for the nine months to March stood at $46.331 billion, just below the Budget ‘profile’ of $46.349 billion.

 

What is the importance of the economic data?