Singin’ the Budget Blues

Published 21-APR-2016 15:16 P.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

In March 2016, the Government released the Financial Statements for the Federal Government up until February 2016. The deficit is running at approximately $36 Billion for the last 12 months writes Mike Cornips, Director at Options Educator, TradersCircle.

Malcom Turnbull and Scott Morrison have been floating a few tax options into the media, but none seem to have gained traction. Scott Morrison said the focus will probably be on spending cuts to try and balance the budget.

A closer look at the 12 month rolling revenue breakdown shows which sector is doing the heavy lifting in maintaining the current level of revenue.

In the 2 years to February 2016, total revenue has increased by about $21 Billion. Tax collections from individuals has increased by $24 Billion. Tax collections from companies has fallen by about $3 Billion over the same 2-year period. The graph below demonstrates how the economy has shifted in relying on individuals paying a greater portion of tax collected (assisted by bracket creep).

Interestingly, there isn’t any talk on tax cuts to individuals in the political conversation. Instead, talks are focused on the rhetoric that company tax rates should be reduced to make companies more competitive. That certainly would exacerbate the trend below.

Company Tax collected $64 Billion in January 2008 and collects the same amount today. Individual Tax collected $121 Billion in January 2008 and collects $189 Billion today. We definitely need more company tax cuts!

Similarly, Superannuation tax collected $10.9 Billion in January 2008 and collected $6.8 Billion today. This is despite total superannuation assets increasing from about $1,140 billion in 2008 to $2,045 Billion as of 31st December 2015 (source: APRA). Tax collected as a percentage of total assets represents about 0.33%.

There is talk about changing Superannuation away from a tax planning /Intergenerational wealth transfer vehicle into a system whose sole purpose would be to provide a retirement income rather than rely on a Government pension.

Tax reform is unlikely, with the usual crew of rent seekers and vested interests lobbying to maintain the status quo.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.


Discover Small Cap
Biotech Stocks

Join thousands of other Investors following our stock commentary for Free