Poorest Aussies cop higher indirect taxes than 1980s: Prof Whiteford

Whingeing about tax is one of Australia’s favourite sports. But do we fork out too much money to the government, asks Daniel Petrie. Have your say in our poll.

Do Aussies pay too much to the government?

Estimating tax liabilities and the comparable merits of other jurisdictions in a like-for-like comparison is a challenge layered with caveats where a one-size-fits-all calculator tends to pose more questions than it answers.

Do we pay too much to the government?

The tax calculator built for this analysis is based on the tax brackets of nations favoured by expatriate Australians as places to live and work.

Inputs into the calculator tend to reinforce the commonly held view around the tax system; income tax is too high, consumption taxes such as the GST are low.

Collectively however it is our tax makeup that is the outlier.

Professor Peter Whiteford from the Australian National University’s Crawford School of Public Policy said Australia’s tax mix is very different from other countries because it records a high-income tax take but does not charge a social security contributions tax and has a low GST.

“Australia’s tax take as a percentage of GDP at 28.2 per cent in 2021 is almost 6 per cent lower than the OECD average at 34.1 per cent,” Prof Whiteford said.

“Income taxes are obviously not the full story noting that the poorest 20 per cent of households pay a higher level of indirect taxes now than in the 1980s for example.

“The need to balance is key but expectation around government and what it provides has to be met with the challenge of improving the tax take for government to deal with population ageing, national security and other spending challenges as well as being prudent with the taxpayer dollar,” he said.

Australians pay some of the highest sin taxes in the world for alcohol and cigarettes, which can be a significant burden for those who consume these products, especially low-income earners.

Fuel excise is also elevated, but the price at the bowser is typically lower than European countries for example but countered by the longer average car journeys to school and work.

While the calculator is an indicative tool, the cost-of-living pressure in terms of housing is not factored in noting a jump into a higher income tax bracket will almost certainly not ameliorate the current household budgetary challenge.

Originally published as Poorest Aussies cop higher indirect taxes than 1980s: Prof Whiteford