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Statement 5: Revenue

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Appendix C: Tax Expenditures

This appendix provides a brief overview of the effect on revenue of the concessional taxation treatment of specific groups and/or activities. Consistent with data published in previous Tax Expenditures Statements (TES), all the data contained in this appendix have been compiled on a cash basis.

Individuals and businesses derive financial benefits from various tax concessions. These concessions are usually delivered by tax exemptions, deductions, rebates or reduced rates. They can either reduce or delay the collection of tax revenue. The Government can use taxation concessions to allocate resources to different activities in much the same way that it can use direct expenditure programmes. For this reason, and noting their direct impact on the fiscal balance, these tax concessions are generally called `tax expenditures'.

Table C1 provides estimates for the period from 1996-97 to 2003-04 of aggregate tax expenditures. These estimates are based on data compiled for the 1997-98 Tax Expenditures Statement published in July 1999.

The New Tax System and The New Business Tax System involve significant reforms to both expenses and revenues - some of which will impact on the costings of tax expenditures. The treatment of The New Tax System in the figures in Table C1 is as follows:

Tax expenditures based on revised benchmarks for The New Tax System and The New Business Tax System are due to be released in the 1999-2000 Tax Expenditures Statement later this year.

Table C1: Aggregate Tax Expenditures 1996-97 to 2003-04

(a) These estimates do not include measures allowing delayed payments of tax.

In analysing the data presented in Table C1, there are a number of considerations that must be kept in mind.

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