Interesting Data from “Re: Think"

The Federal Government released its discussion paper yesterday on the Australian taxation system. Titled ‘Re: think’, the paper provides an insight into what the Government perceives as Australia’s largest taxation challenges rather than inform the public of future policy directives. Although the document does not provide a clear indication of how the taxation system will change, it does contain some interesting data on the Australian taxation system.

In this month’s Wealth Pipeline, we dissect some of the more interesting data contained in the discussion paper.

Interesting Data from “Re: Think”

• Australia’s tax revenue is drawn from more than 100 different taxes – the majority from income tax (approx. 81%) and payroll taxes. 
• Our reliance on income tax is the second highest of OECD countries.
• 2.3% of taxpayers, those on $180k or above, contributed 26.1% of total tax revenue.
• 14.5% of taxpayers, those earning over $80k to $180k, contributed 37.4% of total tax revenue.
• 37.6% of taxpayers, those earning over $37k to $80k, contributed 32.8% of total tax revenue.
• Australia’s corporate tax represented 5.2% of GDP in 2012 - the OECD average was 2.9%.
• There are 8,000,000 companies in Australia. 2,000 companies paid two thirds of the total company tax take with the mining and financial services sector the largest                       contributors.
• Local Government collects around 3% of tax revenue (council rates).
• Australia’s tax burden is higher than our regional trading partners at approx. 27.3% of GDP.
• Australia’s GST rate is the 4th lowest value added tax rate in the OECD.
• GST revenue declining as a percentage of GDP – 3.9% in 2002/2003 and 3.5% in 2013/2014, $6 bn in dollar terms.
• Medicare levy is no longer hypothecated. It raised $10.3bn in 2013/2014 but Medicare cost $64 bn.
• Tax from savings:
• Superannuation raised $6.1 bn to the total tax base in 2013/2014 (1.8%).
• CGT raised $3 bn.
• Interest and dividends contributed approx. $7bn.
• Indirect taxes raised $27 bn, contributing 13% of the total tax take in 2013/2014. $18.3 bn was from fuel tax, $8.5 bn from tobacco, and $5.9 bn from alcohol.
• Investment properties are the third most popular saving vehicle after the family home and superannuation.
• Not for profits account for 3.8% of GDP and generate revenue of $107 bn and hold assets of $176 bn.

Comments on the discussion paper can be made up until 1 June 2015. The Government intends to release its response to the consultation process in a ‘green paper’ due mid-2015, and the final white paper is anticipated to be released before the next federal budget.

Our comments

While it is still early days in the tax reform process superannuation concessions and dividend tax credits will be pulled into the discussion. It is disappointing that Treasury are yet to identify the true cost of superannuation concessions. Any tax reform debate involving superannuation should appropriately consider factors such as the savings the government makes on the age pension with these concessions in place. It should also consider other factors such as superannuation savings mean Australia has a domestic source of savings that would be unaffected by a withdrawal of foreign funding should there be another GFC.