FED:Swan vows 2012 surplus despite revenue hit

AAP General News (Australia)
04-10-2011
FED:Swan vows 2012 surplus despite revenue hit

CANBERRA, April 10 AAP - The budget will return to surplus in 2012 despite new figures
showing a $4.5 billion shortfall in revenue from company and personal income tax revenue,
Treasurer Wayne Swan says.

The federal government is preparing the electorate for a tough May budget by giving
more detail about how the summer floods had hit budget projections.

Mr Swan on Sunday released new figures showing Commonwealth tax collections had fallen
short by $4.5 billion over the first eight months of this financial year.

Personal income tax collections are down by about $1 billion while business tax collections
are $3 billion lower than expected, compared with Treasury's mid-year economic and fiscal
outlook forecasts released in November.

"The summer's natural disasters, continued consumer caution, the subdued recovery in
household wealth, and the higher dollar are all weighing heavily on government revenues,"

Mr Swan said in an economic note.

"These factors mean that tax receipts from businesses and wage earners are lower than
was expected when we put together the mid-year budget update late last year."

Softer capital gains, from a sharemarket still below pre-global financial crisis levels,
was a major factor in the company tax revenue drop, Mr Swan said.

Still, the treasurer said the government was committed to returning the budget to surplus
in 2012/13, as promised during the election.

"Losing big slabs of revenue like this, of course, makes it even tougher to get back
to surplus as planned, but were determined to make the difficult decisions to meet that
commitment," he said.

Earlier, Finance Minister Penny Wong reiterated the need for a tough budget.

"It won't necessarily be a popular budget but it will be a budget that's very focused
on the short and long-term needs of the economy," she told ABC Television on Sunday.

"We've got some short-term softness and that's as a result of a number of factors."

Senator Wong rejected a suggestion the government's aim of getting the budget back
into surplus by 2012/13 was a political benchmark.

"I don't agree with that," she said.

AAP saj/jfm

KEYWORD: BUDGET UPDATE

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