With the Budget only 20 days away, The Daily Telegraph tells us that Australians paid $839 billion in taxes across all levels of government for the latest financial year. That’s a 4.7% rise, which is more than inflation. So that means the real level of taxes went up, which means the real level of tax take from us has also gone up.
At times like these, my favourite views on taxes from famous people come flooding back.
I love these:
- Terry Pratchett: “Taxation is just a sophisticated way of demanding money with menaces.”
- Winston Churchill: “We contend that for a nation to try to tax itself to prosperity is like a man standing in a bucket and trying to lift himself by the handle.”
- Kerry Packer and my favourite: ‘I am not evading tax in any way, shape or form. Now of course I am minimising my tax and if anybody in this country doesn’t minimise their tax, they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra.’
For the ‘numbers’ type, here’s a summary of what we’re taxed:
| # | Category | Detail |
|---|---|---|
| 1 | Total tax paid last financial year | $839 billion — a $37.4 billion increase. About 82% goes to the federal government. |
| 2 | Total income tax (federal) | Up $7 billion to $347 billion. |
| 3 | Company taxes | Rose by 8.2%. |
| 4 | Council rates | Up an additional 6.3%. |
| 5 | Land taxes | Rose 10.1% — property investors are already being slugged ahead of the Budget. |
| 6 | Most taxed state | Victorians pay $6,605 per person — $222 more than NSW taxpayers. |
OK, no-one’s surprised to see that we’re heavily taxed compared to our historical story, with the Albanese Government’s ‘take’ the highest in 30 years. However, on an international basis, we look under-taxed!
Expressed as approximately 30% of GDP means we’re below the OECD average of roughly 34%. We’re in the lower third on the tax table but we look over-taxed compared to the USA and Mexico. But should we compare ourselves to places where medical and social welfare coverage is the substance of Hollywood horror movies?
Here’s a quick snapshot of other countries and the tax they pay as a percentage of GDP:
| Country | Tax as % of GDP |
|---|---|
| Australia | 30% |
| USA | 28% |
| Mexico | 17% |
| France | 45% |
| Denmark | 46% |
We feel the tax burden because we have a small GST. That means income taxes are high, but unlike a lot of European countries we don’t have an inheritance tax or a broad-based wealth tax.
Spending-wise, we’re at 27–28% of GDP, which is lower than the OECD average of 40–42%. But our spending is high on a local historical basis. This has been driven by numerous factors: the aftermath of Covid; the explosion of the public service; the growth of the NDIS program and the tax cuts to offset the impact of high inflation; elevated interest rates; the overall rising cost of living; and the Albanese Government’s desires to remain politically popular.
Here’s one final point that the OECD analysis makes about our super system that effectively takes 12% of a worker’s income.
The Paris-based think tank points out: “Australia’s compulsory superannuation system (employer-funded retirement savings) privatises a large chunk of what European governments fund through public pensions — this alone takes significant spending off the government’s books.”
While you might argue that the 12% take is akin to a ‘tax’ over someone’s working life that’s eventually returned with interest, it means the worker will have less chance of getting a pension when they retire.
This means the super system looks very much like a win-win situation for federal governments and a “kinder loss and kinder win” for the Australian taxpayer. What’s that old line? Oh yeah, “I’m from the government and I’m here to help!”
If we want a great style of living as now then Pay up
but the big question is pay up by who and how the Government wastes our money ! ?
why should I pay 47% tax on my hard earned extra income if I choose to work more whilst billionaires and multinational companies pay far less ?
why should professional property investors who are simply buying and selling, buying and selling, without contributing any productivity, pay less than 25% tax on their profits ?
and why should the Govt waste my hard earned taxes on the National Disability Insurance Scam ?
20-years ago we were debt free, now we are not, and the money has to be paid back.
One could say we as a nation have been living on the credit card for 20-years and now we have to make the repayments and have backed in costs, like the NBN, NDIS, medical etc
Either we as a nation tighten the belt, which there is very little appetite for at the house hold or government levels or taxes go up, it’s pretty simple stuff!
Governments on both sides since Howard and Costello have spent like drunken sailors! Hoking and Abbott tried to right the ship in 2013 and got frog marched out of office and since then there has been no appetite for fiscal responsibility by state or federal government.
How we have gotten to this state is mind boggling and shows how political weak our leaders are and economically illiterate most voters seem to be or selfish.
Everyone bangs on about how hard it is for the younger generation to get ahead when there parents are the ones that have voted for politically and economically week governments that run up the bar tab and now no one wants to pay it back!!
One would think that building up a sovereign wealth fund such as created for public servants and the like for their superannuation , all our services such as NDIS , Medicare , Etc., funded by a wealth fund would stop politicians engineering budgets to gain more votes ,would help to keep our taxes down and more people provided with benefits easier than relying on taxes, but perhaps that’s too hard for politicians to come to terms with , if they truly wanted to reign supreme this would be the way to take the country forward ,with absolute trillions in the ground and we don’t put aside any of the value raised ,unbelievable