Covid might have largely ‘come and gone’ for most of us but its economic ‘infection’ means that many of us are coughing up huge piles of taxes to pay for the consequences of programs such as Job Keeper and massive infrastructure programs to reboot once sickened local, state and national economies.
Economics is a zero-sum game and when our governments rescued our standards of living, they racked up debt, and then there were elections to win and groups such as unions, green and socially important groups, along with other interest groups to be rewarded or looked after.
NDIS is a case in point that cost $48 billion in 2023-24 but by 2028 is expected to blow out to $58 billion. These are big blowout figures compared to the predicted $13.6 billion when it first kicked off.
With all these big bill pressures on governments of all colours, there has been a voracious search for money in people’s and business’s bank accounts, wallets and purses, to put some sniff of financial sweetness in what looks like stinking state and federal budgets.
The Australian looked at the recent tax grab and here are the lamentable numbers:
- The three levels of government’s tax take has surged 61% since Covid to $893 billion.
- Stamp duties, payroll and company tax have more than doubled our economic growth rate.
- Stamp duty we pay on big transactions such as buying a house rose 112% to $41 billion.
- Company tax is up 70% in six years to $151 billion.
- Income tax hits us 68.3% having taken $334 billion over the past six years.
- Payroll tax imposed by state treasurers rose over 80%.
- The Australian adds that “Total tax across all levels of governments rose 7 per cent in the past year alone.”
And the newspaper gives our current federal Treasurer a dubious award. The national tax grab is up 61% since Covid, as “Jim Chalmers is forecast by Treasury to become the biggest income taxing treasurer as a share of GDP in history, hitting 18.6 per cent this financial year.”
Corinna Economic Advisory economist Saul Eslake told The Australian that bracket creep and a 60% surge in house prices have powered a lot of these tax collections, but it was politicians who decided to keep it and spend it that has resulted in big budgets across all governments and economy-killing drags on businesses and households.
If the spending had been curtailed as taxes mounted up, budget surpluses would’ve been created by treasurers, and taxes could’ve then been reduced, which would’ve given incentives to businesses to grow and create income as well as jobs, all characteristics of a thriving, healthy economy.
On the subject of encouraging business, which is one area of commitment I have to admit Donald Trump in the US has a sensible and big commitment to, recent state governments here have had shockers. In Australia, the worst tax of all, payroll tax, which hits employers for creating jobs, rose 80.5% over the past six years.
But this state government tax terrorisation could get worse because the Chalmers’ Budget is now adding pressure on house price falls and is decreasing property purchases so these state treasurers will get less from stamp duty on home buyers.
The Australian reports that “EY chief economist Cherelle Murphy estimates that a 2 per cent fall in home prices could increase the revenue loss [to state governments] by about $3bn in the 2027 financial year.”
And as we have a slowing economy that only grew by 0.3% in the March quarter and 0.4% in the June quarter, making annualised growth on the six months of 2026, only 1.4%, I expect businesses across the country can expect the escalation of payroll tax demands, meaning business owners will have to fork out more for having the audacity to grow and create jobs, which leads to higher income taxes for the federal government.
It’s no surprise that politicians like Donald Trump and Pauline Hanson, who once would’ve been seen as easily ignorable and even laughable political aspirants, are now seen as alternatives to conventional and largely disappointing politicians.
This taxing torture needs to stop.
