Our tax bur­den is low, ex­cept for com­pa­nies

The Australian - - THE NATION - DAVID UREN AS­SO­CIATE ED­I­TOR

Aus­tralia is more de­pen­dent on highly volatile com­pany tax rev­enue than al­most any other ad­vanced na­tion, while mak­ing much less use of more stable taxes on con­sump­tion.

The OECD’s an­nual re­view of gov­ern­ment fi­nances shows Aus­tralia is one of the low­est­tax­ing na­tions over­all, but it hits its busi­ness sec­tor much harder, rais­ing the equiv­a­lent of 4.6 per cent of GDP in com­pany taxes, which is al­most dou­ble the OECD av­er­age of 2.9 per cent.

Com­pa­nies pro­vide 16.5 per cent of gov­ern­ment tax rev­enue in Aus­tralia. The only OECD mem­bers with a greater de­pen­dence on com­pany taxes are Mex­ico and Chile, which both have poor per­sonal in­come tax col­lec­tions. The av­er­age ad­vanced na­tion gets only 9 per cent of its rev­enue from com­pany taxes, with most ma­jor Eu­ro­pean na­tions rais­ing 5 per cent of their rev­enue from busi­ness.

Aus­tralia’s over­all tax bur­den is one of the low­est of ad­vanced coun­tries, with to­tal gov­ern­ment tax rev­enue amount­ing to 27.8 per cent of GDP, com­pared with an ad­vanced-coun­try av­er­age of 34 per cent. Aus­tralia’s tax bur­den is the sev­enth-low­est, with the US, Ko­rea and Ire­land be­ing the only ma­jor ad­vanced na­tions rais­ing less.

Aus­tralia’s re­liance on com­pany tax rev­enue re­flects its high stan­dard rate of 30 per cent, which is much higher than the ad­vanced-na­tion av­er­age of 23.9 per cent, and has not been changed for 18 years.

La­bor and the Greens blocked ef­forts by the Coali­tion gov­ern­ment to lower Aus­tralia’s stan­dard com­pany tax to 25 per cent by 2026-27, which would still have been above the OECD av­er­age. Tax cuts were agreed only for small busi­ness.

The high de­pen­dence on com­pany taxes is also a re­sult of the prof­itabil­ity of the re­sources and fi­nance sec­tors, which be­tween them pro­vide about half of all com­pany tax rev­enue.

The OECD re­port shows it is the volatil­ity of com­pany taxes that is pri­mar­ily re­spon­si­ble for Aus­tralia’s decade of deficits.

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