Tax and Final Budget Outcome Essay

Submitted By itzays
Words: 1815
Pages: 8

The Budget Process
According to the Australian Government’s Department of Finance and Deregulation the Budget Process has three stages, beginning with the prioritising of fiscal and policy priority management decisions, which occurs between September each year and the following May, whilst the spending and reporting activities are ongoing throughout the cycle. The next stage is the Executive Government spending and governing the management and use of public money. The intended use of the Governments revenue is recorded in the Budget papers and monthly reports are given throughout the financial year, updating information on the economic and fiscal outlook. The last stage occurs at the end of every financial year, when the government releases a document providing the final Budget outcome and the process will restart.

Budget Outcomes
The budget outcome determines the government’s fiscal policy stance, which determines the government’s next course of action. There are three possible outcomes that can occur, they are:
A balanced budget: occurs when government revenue is equivalent to their expenditure, it is associated with the neutral fiscal policy stance as there has been no effect on the level of aggregate demand and economic activity.
A budget surplus: occurs when government revenue exceeds their expenditures, it is associated with a contractionary fiscal policy stance, which aims to create a smaller deficit or larger surplus to decrease economic activity by dampening aggregate demand. Inflation tends to decrease, but risks increasing unemployment if demand is reduced too much.
A budget deficit: occurs when government revenue is lower than government expenditure, it is associated with an expansionary fiscal policy stance, which is the opposite of a contractionary fiscal policy, except inflation may rise when the economy grows too quickly.
The Federal Budget will cause an estimated $18 billion deficit, therefore the government will be in an expansionary fiscal policy stance. The Budget Paper No. 1 Statement 3 outlines the Government’s fiscal strategy to achieve budget surpluses in 2015-16, therefore the Government will be in a contractionary fiscal policy stance.

Main Revenue and Expenses of the Federal Government
From the ‘Revenue’ pie chart, it is evident that the majority of the Federal Governments’ revenue for the 2013-14 Budget comes from individual’s income tax, accounting for 45.24% of total revenue, company and resource rent taxes (20%) and sales taxes (14%).
Revenue
Revenue
The main expenditures of the 2013-14 Federal Budget can be seen in the ‘Expenditure’ pie chart. The government has mainly invested into social security and welfare, accounting for 34.7% of total expenditure, health taking up 16.23% of expenditure, and 7.46% into education.
Source: Budget Overview: Appendix G – Australian Government Taxation and Spending

Source: Budget Overview: Appendix G – Australian Government Taxation and Spending

Expenditure
Expenditure

Major Goals of the 2013-14 Federal Budget
The major goals of the 2013-14 Federal Budget are to return the budget to surplus by 2016-17 while supporting jobs and growth and building a stronger economy, a smarter nation and a fairer society. This Budget delivers $43 billion in savings to return the budget to surplus and fund nation-building reforms. (All statistics under Major Goals are from the Budget Overview)

Building a Stronger Economy
The Budget investments into jobs, infrastructure, and education and supporting industry will help build a stronger economy. $1 billion has been invested to boost Australian innovation, productivity and competitiveness under A Plan for Australian Jobs. The $24 billion investment into infrastructure to build roads provides a critical boost to Australia’s productive capacity. The government backing Australian companies to win more work at home and abroad, and helping small and medium businesses to grow and create new jobs, which is…