The Federal Budget 04 - 05 is a pre-election budget, so it has incentives for tax payers to vote for the current government.

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BUDGET

The Federal Budget 04 – 05 is a pre-election budget, so it has incentives for tax payers to vote for the current government.

 This year’s budget is also expected to address the following issues: structural unemployment, the “greying” population and the declining birth rate.  

While still trying to achieve the goals of every government: strong economic growth, low unemployment and 2-3% inflation.

The main features of the Federal Budget are: The Income section & the Expenditure section.  

The Income section of the Budget, forecasts the sources of revenue for the up coming financial year, the biggest part of the Income section is Income tax, with about 75% of the government’s revenue coming from this section.  

The Expenditure section details which areas the government will spend its money in, in the upcoming financial year.

 The largest area of government spending will be transfer payments.  Accounting for approx: 43% of the government spending.  

The budget has Expenditure greater than Income so that the fiscal surplus has decreased since last year, so the fiscal stance is mildly expansionary.

In last year’s budget there was a larger surplus.

Since this is a pre-election budget the government has just announced tax cuts.  A $14.7 billion commitment to a two – stage adjustment, to tax thresholds has been made.

 The tax thresholds are set to rise.  

$37 billion will be spent on overhauling tax, superannuation & family assistance over five years.  

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But the tax cuts are not evenly spread, low-income earners will benefit most from the overhaul of family tax payments while middle & high-income earners get the biggest tax cuts.  

Older people will get improved incentives to save for retirements, including increasing the Government’s payment from $1000 to $1500 for a $1000 personal contribution & reducing the high-income earners’ superannuation surcharge rate.

 The family measures include: relaxing the income test for the benefit, a new maternity payment of $3000 for mothers; an increase of child care places.

The unemployment rate at the moment is 5.6%, with the ...

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