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Similar to Australia's current tax system - taking a look in five slides
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Australia's current tax system - taking a look in five slides
- 1. Australia’s current tax system Taking a look in five slides April 2015
- 2. Financing government activities 1 Australia’s current tax system raises over $400 billion for public services like health, social security payments, education, infrastructure and defence
- 3. Major sources of tax revenue 2 In Australia, most tax revenue is raised through personal and corporate income taxes and taxes on consumption (particularly the GST and fuel taxes), but there are many other taxes in the system. In 2012-13: • the federal Government collected around 81% of taxes • states and territories collected around 15% of taxes • local governments collected around 3% of taxes Taxation revenue by type of tax, 2012-13 Source: ABS, Taxation Revenue, Australia. Percentages may not sum to 100 per cent because of rounding. Personal income tax 39% Company tax 19% Fuel taxes 4% Other federal taxes 7% GST 12% Payroll taxes 5% Stamp duties and insurance taxes 5% Other state taxes 5% Local govt rates 3%
- 4. 3 Australia relies more heavily on personal and corporate income taxes than most other developed countries, and some regional competitors Unlike most other developed countries, Australia does not have any ‘social security contributions’ levied on individual earnings. But states and territories levy payroll tax on employee remuneration (above a threshold). Taxes on income and social security contributions plus payroll taxes as a percentage of total taxation OECD and selected Asian economies, 2012 1 Source: OECD, Revenue Statistics; OECD, Revenue Statistics in Asian Countries; Treasury estimates using IMF, Government Finance Statistics and Centre for Monitoring the Indian Economy database. 0 20 40 60 80 0 20 40 60 80 Denmark Australia NewZealand Norway UnitedStates Canada Switzerland Iceland Ireland Chile UnitedKingdom Luxembourg Belgium Sweden Finland Italy Japan Israel Germany Spain Korea Austria Portugal Mexico Netherlands Greece France Turkey Estonia Poland CzechRepublic Slovenia SlovakRepublic Hungary Malaysia HongKong Singapore Indonesia China India Per cent of taxPer cent of tax Personal and company income taxes Social security contributions and payroll taxes Direct taxes on income, earnings and payroll
- 5. Australia’s reliance on personal and company income taxes has remained largely unchanged since the 1950s, despite significant changes to the economy.2 4 The composition of Australia’s taxes over time Personal income tax 34% Company tax 15% Other federal taxes 37% State and local taxes 14% 1950s Source: RBA, Australian Economic Statistics 1949-50 to 1994-95; ABS, Taxation Revenue. Personal income tax 39% Company tax 19% Other federal taxes 11% GST 12% State and local taxes 19% 2012-13
- 6. State taxing and spending responsibilities 5 State and territory government expenses and own source revenue, 2013-14 3 Source: Treasury calculations based on state and territory 2013-14 final budget outcomes (or equivalent) and state and territory 2014-15 budgets. In Australia, the federal Government raises more revenue than it spends on its own programmes, whilst the states and territories raise less revenue than they need to fund their programmes. This gap is referred to as vertical fiscal imbalance (VFI). About 45 per cent of state and territory revenue comes from the federal Government, including the GST. Australia’s degree of VFI is high by international standards. Other expenses Health Education Transport and communications Public order and safety Own source tax revenue Sales of goods and services Other revenue Royalties 0 50 100 150 200 250 0 50 100 150 200 250 State expenses by function State own-source revenue $billion Thousands $billion Vertical fiscal imbalance
- 7. Notes 1. Taxes on income are based on the OECD (series 1000) and IMF classifications (series 11). Direct taxes include personal and corporate income taxes (OECD series 1000), social security contributions (OECD series 2000) and payroll and workforce taxes (OECD series 3000), but does not include other compulsory non-tax payments (such as the Superannuation Guarantee). Estimates for China, Hong Kong and Singapore have been prepared using the IMF’s Government Finance Statistics, while estimates for India have been prepared using the CMIE database. These estimates are not directly comparable to OECD statistics. Unlike the OECD, the IMF does not classify social security contributions as a tax. To improve comparability with OECD statistics, direct and total taxation estimates are prepared using IMF data but inclusive of social security contributions. Statistics for China are for 2011 and for India are for 2011-12. 2. The RBA (1950s) and ABS (2012-13) data sources used to construct the state and local shares have some very minor differences, mainly relating to the coverage of ‘Stamp duties’ and ‘All other’ taxes. 3. ‘Sales of goods and services’ includes user charging on state provided services. For the purpose of this chart the distribution of GST revenue is not considered state own source revenue. ‘Own source tax revenue’ includes stamp duties on conveyances, land tax, other property taxes, and payroll tax, among other state taxes.