Aussies set to cough up more tax

Australians will be paying a higher percentage of their economic output in income tax than they are today within four years, even if the Stage 3 tax cuts go ahead in July next year.

Federal budget papers show income tax receipts are set to grow by $29 billion over the next four years with the percentage of GDP taken in tax rising from 11.1 per cent in 2021-22 to 12.2 per cent by June 2027.

Australian Governments rely more heavily on income taxes for their revenue than almost any in the developed world.

In 2020 the OECD estimated only governments in Iceland and the USA raised a higher percentage of their revenue through income tax than Australia.

The budget papers show that this year almost 43 per cent of the federal government’s tax take came from salary earners, which will stay steady over the next four years.

Innes Willox of the Australian Industry Group said that with very little separating the top countries in the OECD’s league table it was possible that Australian Governments could soon be the most dependent on income tax in the world.

“Income tax currently accounts for 42.9 per cent of total tax in Australia, one of the world’s highest rates and current budget settings lock this in this high rate until 2025-2026,” he said. Opposition Treasury spokesman Angus Taylor said the budget papers showed why it was important the government kept the Stage 3 tax cuts which abolish the 37-cent-inthe-dollar tax rate to help middle income earners.

He said ATO tax statistics showed that since 2019-20, as many as 500,000 Australians and 200,000 women have been dragged into the 37-cent-taxrate by inflation, with the share of people in that tax bracket increasing from 13 per to 18 per cent since then.