Net tax collections of $273.0 billion in 2010-11 were 4.5% below the 2010-11 federal budget forecast.
The difference between forecast and actual collections in 2010-11 is the second largest recorded during the past decade. 2010-11 was one of only two occasions during the period when actual collections fell significantly below forecast.
FIGURE 4.2: Percentage difference between forecast and actual collections, 2001-02 to 2010-11
The percentage differences are measured relative to the forecast in the Budget immediately before the commencement of the financial year. For example, the percentage difference for 2010-11 reflects the difference between the actual outcome and the forecast in the 2010-11 federal budget.
A positive figure indicates that actual collections for the financial year were higher than forecast in the Budget immediately preceding the financial year. Correspondingly, a negative figure indicates actual collections were lower than forecast. For example, in 2010-11 actual collections fell 4.5% below the forecast for collection in the 2010-11 federal budget.
Over most of the past decade the Australian economy has been stronger than expected and tax collections consistently exceeded expectations by a considerable margin.
Since the start of the global financial crisis in 2008-09, collections overall have underperformed against expectations.
Revenue collections grew broadly in line with nominal gross domestic product (GDP) until 2007-08. Collections have grown more slowly than nominal GDP since the beginning of the global financial crisis.
FIGURE 4.3: Relationship between nominal GDP and collections, 2000-01 to 2010-11
2000-01 is base year.
During 2010-11, the combination of the natural disasters in Australia and abroad, the sharp rise in the Australian dollar and weak household demand resulted in difficult trading conditions for businesses outside the mining and mining-related service industries. This constrained growth in revenue collections. Collections were also constrained by losses generated during the global financial crisis and behavioural effects which increased the cost of legislative measures.
The shortfall in collections relative to the 2010-11 federal budget forecast was primarily in company tax, other individuals and GST. In addition, petroleum resource rent tax collections were around $0.9 billion lower than expected, due largely to unanticipated levels of expenditure on production facilities.
In contrast, collections were higher than forecast for income tax withholding for individuals and excise.
FIGURE 4.4: Difference between initial budget forecast and actual collections, 2010-11