Australia’s tax burden outpacing inflation

The tax burden on Australian’s is growing at more than double the rate of inflation, a study by The Centre for Independent Studies (CIS) shows.

Each year the CIS compares how much wealth the country is creating and how much of this is being taken by local, state and federal governments in taxes. According to the report:

One hundred years ago, Tax Freedom Day fell on January 24, but by the late 1950s it had stretched to March 19. Throughout the 1960s, 1970s and 1980s government spending rose much faster than national wealth, so Tax Freedom Day got later and later in the year.

This year, every dollar the country earned from New Year's Day up until April 24 has gone to the government in taxes.

In 2001, Tax Freedom Day was actually pushed back by almost a week, but since then it has been creeping steadily forward; last year it reached April 25, equalling the worst year ever.

While 2007 has seen a slight improvement on this dismal performance, the nation's tax bill is still rising much faster than the inflation rate:

The average amount of tax paid per head of population has gone up to $14,551 from $13,792 in the past 12 months.

But because gross domestic product (GDP) per head has risen faster still – to $47,199 from $44,376, a 6.4 per cent increase – tax this year is taking slightly less of the country's wealth than it did last year.

At a time when people are getting richer, the demands on government spending should be falling, yet taxes are still galloping ahead of inflation, says The Age.

Source: Tax burden outpacing inflation, study claims, The Age, April 24, 2007.

For text: http://www.theage.com.au/news/business/tax-burden-outpacing-inflation-study-claims/2007/04/24/1177180634931.html

For more on International Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=26

FMF Policy Bulletin/ 02 May 2007