Taxing times ahead

Wage earners to be squeezed for more as big miners pay less

THE federal budget will become more reliant on personal income tax revenue as other sources dwindle and no action is taken on reaping more from gas and mining firms, a new report says.

The Parliamentary Budget Office yesterday released an analysis of the tax system since 2001 and some of the risks ahead.

The main changes since 2001 had been a drop in fuel excise due to fuel efficiency and a previous freeze in indexation, a fall in customs receipts due to free trade deals, and a drop in company tax receipts as losses are carried forward.

Based on recent trends, the report found the future would see a drop in company tax receipts, an increase in personal income tax receipts and drops in consumer tax receipts driven by consumer behaviour and technological change.

“If these risks to tax receipts eventuate, and in the absence of other taxation reforms, maintaining Commonwealth Government revenue at recent levels as a share of GDP will lead to an increasing reliance on taxes on labour income through the personal income tax system,” the report said.

The study found personal income tax already accounted for 53.7 per cent of Commonwealth receipts.

In comparison, the report showed resource rent taxes made up 0.4 per cent of receipts.

Petroleum Resource Rent Tax had fallen as a share of GDP since 2001 despite the increase in petroleum production and exports and strong price growth through much of the period.

The report warns that although Australia is set to become a leading producer and exporter of liquefied natural gas, there is a “significant likelihood that this will not translate into higher PRRT revenue”.

Shadow treasurer Chris Bowen said the tax base clearly needed to be broadened, as the Government continued to rely on income tax to fund basic services.