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Aussies pay eighth lowest rate of tax AUSTRALIA is the eighth lowest taxing country in the 30 member OECD according to the latest edition of OECD Revenue Statistics.It is also one of seven countries that reduced their tax level for the most recent reporting year, 2005 (Australia's 2005-06 financial year). Since 2005 the Australian Government cut taxes further in 2006, 2007 and last month announced a tax plan to cut tax further through 2010-11. Revenue Statistics is published annually by the OECD to provide internationally comparable data on tax levels and structures. It reports the combined accrual revenue collections at federal, state and local government levels. At the federal (Australian Government) level, the tax to GDP ratio has been declining. Over the OECD ten-year comparative period, the federal tax level has decreased from 22.3 per cent of GDP in 1995 to 21.4 per cent in 2005. The Australian Government's Final Budget Outcome 2006-07 shows a further reduction of the federal tax level to 21.2 per cent in 2006-07. The OECD classifies the GST as a state tax as all GST revenue is paid directly to the States and is not available for expenditure by the Australian Government. The Australian Government has been progressively reducing the tax level on Australians through significant cuts in personal taxes, including in each of the last five budgets and its tax reform plan announced in the recent Mid-Year Economic and Fiscal Outlook 2007-08. The Government has also set an ambitious goal over the next five years. Australia's direct taxation on individuals and payroll is the fifth lowest of the 30 members of the OECD taking into account personal income taxes, payroll taxes and social security contributions. Australia and New Zealand are the only two countries in the OECD that do not impose taxes in the form of social security contributions, which now have become a major source of tax revenue in OECD countries. The government's disciplined fiscal management has enabled Australia to also have a lower spending to GDP position consistent with its low tax to GDP position. As the OECD Economic Outlook (June 2007 edition) shows, the government spending to GDP ratio in Australia has dropped from 38.1 per cent in 1995 to 34.6 per cent in 2005, making it the third lowest spending country of the 28 OECD countries (Mexico and Turkey do not provide comparable data). |
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