Business continues to provide the majority of the funds flowing into the Government’s coffers, with Australia’s reliance on corporate taxes the second highest in the world for the second year in a row, according to a new report from the OECD, which examined 30 developed countries.
Companies are responsible for 19.3% of the totals tax take in Australia – which is almost double the average for the other OECD countries (10.3%).
Company tax has risen by 1.7 percentage points in Australia over the past 10 years, compared with an OECD average of 0.9%.
The survey also reported that Australia is relying more heavily on direct taxes on individuals and companies and less on indirect taxes raised from indirect levies on goods and services.
The level of indirect taxes on goods and services has fallen from 29% to 27.8% over the past 10 years, due partly to the reduction in the number of state taxes.
The report shows our position on the tax ladder is unchanged in 2005. Australia has not moved from its position as eighth lowest taxing country in the OECD, despite many billions of dollars of taxes cut by government.
The total tax revenue in Australia equals 30.9% of GDP – below the OECD average of 36.2%.
The survey found that Australia was the seventh lowest taxing country on personal income. It collected 12.3% of GDP in 2005, down slightly from 12.5% the year before. However Australia is well above the OECD average, at 9.2%.
Countries should be relying more on indirect taxes as that would help the tax on labor to come down, reducing disincentives to work, the report says.