Australia’s Aggregate Tax Burden: Measurement, Interpretation and Prospects

Greg Smith

Is Australia a relatively low tax country? What does the “tax to GDP ratio” really mean or matter in any case?

Whether Australia qualifies as a relatively low tax country depends on how and when we make the comparisons. What the tax-to-GDP ratio means or matters depends not just on the direct effects of taxes but also on the range, scale and timing of the government services that taxes pay for.

This paper briefly explores these issues, looking at a range of government tax and service issues from the point of view of comparing “aggregate tax burdens”. It discusses the use of the tax-to-GDP ratio as an indicator of tax burden and some of the problems that this measure can present. It argues the tax-to-GDP indicator has a range of weaknesses that can give misleading impressions of government size and tax burden. The paper also provides a brief survey of some other issues that may have affected Australia’s tax burden in the past, and which may influence the future scope for change.

The aim of the paper is to get a better understanding of the measures and the issues they address. It does not ultimately takes sides in the debate about whether tax burdens are too high or too low. The intention is to provide a high level map of the issues, to better inform the political discussion rather than directly participate in it.

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The States and the GST: Demystifying Australian Federal/State financial arrangements

David Collins and Neil Warren

While there is considerable debate in Australia about the role of the States and their relationship with the Commonwealth, in the Australian community at large, and even among tax professionals, there is a widespread lack of understanding of the way in which the financial relations between the Commonwealth and the States are organised.  As a result, there is a general inability to assess the criticisms being made of the 1999 Intergovernmental Agreement (IGA) under which the current earmarking of GST revenue to the States has been agreed with the Commonwealth.

The objective of this publication is to assist in remedying this lack of understanding.  It provides an explanation, in terms comprehensible to the intelligent layperson, of the workings of the system under the 1999 IGA, its financial implications, criticisms which have been made, and reform proposals. The publication attempts to take a balanced and neutral approach, rather than to recommend a particular package of reforms. Its intention is to inform, not to persuade.

Priced at $10.00 incl. GST

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