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Fiscal Austerity, but Tax Returns Set to Go
Source: smh.com.au
Source Date: Tuesday, May 11, 2010
Focus: Citizen Engagement, Internet Governance
Country: Australia
Created: May 17, 2010

The hated tax return will vanish for millions of Australians and savings will be taxed at a lower rate as part of federal Treasurer Wayne Swan’s third budget, announced in Canberra tonight.The measures are rare sweeteners in a budget that defies the old political logic of giving voters a raft of goodies in an election year.Instead, the Rudd government has chosen to emphasise esponsible management, cutting debt and aiming the budget for a surplus three years earlier than expected.The deficit is forecast to be $40.8 billion next financial year, but the budget would return to surplus – a modest $1 billion – in 2012-13.Just a year ago, shaken by the global financial crisis, Treasury had predicted a surplus would not be achieved until 2015-16.

“We’ve set a new benchmark for responsible economic management,” Wayne Swan told journalists packed into a parliamentary conference room for the annual budget lock-up.From 2012, taxpayers will be able to abandon old-style tax returns, opting instead for a $500 standard deduction’ to cover work-related expenses, saving them the cost of an accountant.The standard deduction will increase to $1000 the following year.“We have decided to provide taxpayers the choice of a standard deduction instead of the hassle of shoeboxes full of receipts and the costs of professional assistance,” Mr. Swan said.According to the Treasurer, the simplified ‘no tax returns’ system will be available to 6.4 million taxpayers saving them an average $192 each year.

In another measure drawn from the recently released Henry Review, the government will reduce the tax paid on savings, with a 50 per cent cut on the tax charged for up to $1000 earned from savings accounts, bonds, debentures and annuity products.The government expects 5.7 million Australians to pay less tax in 2011-12 as a result of the measure and says it will especially benefit small savers and older Australians who tend to put non-superannuation savings into interest-bearing accounts.The budget also delivers an expected $2.2 billion over four years to the health system.Measures include $355 million for 23 ‘GP super clinics’ and more than 400 ‘facility upgrades’.According to the Treasurer, Australia now has “a budget position that is the envy of the developed world.”Net debt is forecast to peak earlier and lower than expected at 6.1% of GDP, or just over $90 billion, in 2011-12.

That’s less than one-tenth the average of the major economies.The budget’s economic forecasts are also up-beat, allowing the Treasurer to boast in his address to Parliament that “unemployment … is expected to fall further from 5.3 per cent today to 4.75 per cent by mid-2012, around the level consistent with full employment.”“Australians have defied global economic gravity,” the Treasurer said.In one of the glossy budget brochures handed to journalists, the government claimed to have achieved “the fastest positive turnaround in the budget position in modern times”.Treasurer Wayne Swan says it’s the result of “very substantial restraint … on the whole budget” including “small cuts right through the budget”.

Among savings found by the Treasurer is a 25 per cent increase in the aviation fuel excise likely to drive up ticket costs for air travellers, though the government says the extra revenue will be used to bolster air safety.Mr Swan says he had a constant message for government ministers seeking funds for new programs. “… no new policy proposals here, and by the way here’s a haircut”.By pitching the budget as austere the Treasurer and Prime Minister Kevin Rudd will be helped in blunting the opposition’s repeated claim that government spending is out of control.
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