Smokers to be hit in budget rescue package

Malcolm Farr
news.com.au
October 17, 2012

THE Government next week will launch a Budget rescue package aimed at increasing some taxes but not directly costing jobs.

Smokers are expected to be hit by another jump in tobacco excise as Treasurer Wayne Swan searches for close to $6 billion in extra revenue to cover a fall-off in tax returns in other areas.

The increased excise will be introduced with the new laws on plain packaging.

The economic statement is being likened to the first Budget of the Howard Government 16 years ago which slashed spending to cover what then Treasurer Peter Costello said was a massive Budget black hole left by Labor.

Education and re search grants are expected to cut or deferred but the Government is determined not to directly reduce employment.

Ministers have condemned Queensland’s LNP Premier Campbell Newman and NSW Liberal Premier Barry O’Farrell for sacrificing jobs as they patch up their respective economies. Their savage programs have been used by Labor to claim Opposition Leader Tony Abbott would do the same if elected Prime Minister.

That political offensive has narrowed the options for the Government next week. It cannot be seen to adopt the employment wrecking strategies it has criticised in others.

The mini-budget will be based on the Mid-year Economic and Fiscal Outlook (MYEFO) – the progress report on the 2012-13 Budget delivered in May.

The mini-budget’s aim will be to protect the promised 2012-13 surplus of $1.5 billion and balance a fall-off in tax receipts which has left the Government looking for new funding sources to pay for education and health policies.

MYEFO is expected to confirm falling Government revenue as mineral prices subside from record highs, subdued company tax receipts, and continued tight-fistedness by households who are saving as much as 9 per cent of their income rather than spend it in shops.