Vernon Small at Stuff reports:
Treasury is working on a radical plan to set up a new “jam jar” fund to hold extra tax revenue to smooth income variations.
It says the “stabilisation fund” could operate as a stand-alone agency and be put in place if further debt repayment became politically unpalatable.
The fund was one of three options outlined in a pre-Budget Treasury document late last year and released yesterday.
It said there were three broad, but not mutually exclusive, options for so-called “revenue surprises”.
They were to pay down debt, commit it to “one or more existing funds (or ‘jam jars’), and create a new form of fund or jam jar (eg a stabilisation fund)”.
I’m very disappointed that Treasury did not look at a fourth option for revenue surprises. That is tax cuts.
If the Government has more revenue than it expected, then why not allow hard working taxpayers to keep more of their income?
One could have a policy that any surplus funds, greater than forecast in the last Budget, be refunded to taxpayers at year end.
So if the surplus projection was say $2.1 billion and the actual surplus turned out to be $2.9 billion, then the $800 million extra gets refunded proportionally to taxpayers.