The Aussie economy saw a considerable slowdown in the second half of 2018, with September quarter witnessing a growth of 0.3 percent and December quarter witnessing a growth of 0.2 percent. This resulted in second half witnessing one percent annualised growth vs. four percent witnessed in the first half. Poor private consumption was one of the factors contributing to the slowdown in the growth.
The Reserve Bank of Australia attributes the slowdown in income growth and consumption to the increased action on tax deductions and better utilisation of technology by the Australian Tax Office (ATO).
The growth in tax paid had surpassed the income growth. At the same time, the growth in gross household income had been slower.
The rate of growth of household income was 3.5 percent as against taxes paid by households have increased by eight percent in the past year, registering a more than two times growth than the household income growth.
The tax take has increased on the back of reduction in deductions and offsets. The ATO has used technology to increase its overall tax revenue.
Non-labour income was lower due to higher tax take.
The non-labour income is comprised of rental income, social assistance, other investment income among many other. The RBA reported that the social assistance had been flat and the same was seen in rental income as well. However, the data coincided with a better unemployment rate.
The unemployment rate had dropped to 4.9 percent in the latest jobless rate data released by the ABS. The jobless rate had dropped from in the month of February from 5 percent to 4.9 percent. With full-time employment came in at 210k persons as tallied from February 2018. More on this could be read here.
RBA also attributed the increase in tax collection to the increase in interest rates on investment property loans with higher house prices leading to increased capital gain tax liabilities upon selling a property.
Recently the Australian Tax Office had released details on its technology priorities for 2019. Ramez Katf, the Chief Information Officer, said that their primary focus is on finalising the move of intermediary portals and agents to the ATO online services platform. ATO’s e-commerce platform is reported to have handled six times the transactions dealt with over one year. This validates ATO’s efforts to improve system reliability, and system performance.
He also stated that they are working towards increasing community dependence on their digital services. ATO is working on its new e-commerce offering, enabling the next version of Single Touch Payroll, and SuperStream. The Australian Business Registry is also getting modernised, and the team is working towards the same.
To support the ATO’s priority, Mr. Katf stated that they have been working on their IT sourcing strategy. On the same lines as the Government’s IT procurement policy, ATO has split its IT contracts into smaller bundles. According to the CIO, this move will help them to reach a broader market of specialist providers and helps to engage the right expertise.