2. Financing government activities
1
Australia’s current tax system raises over $400 billion for public services
like health, social security payments, education, infrastructure and
defence
3. Major sources of tax revenue
2
In Australia, most tax revenue is
raised through personal and
corporate income taxes and
taxes on consumption
(particularly the GST and fuel
taxes), but there are many other
taxes in the system.
In 2012-13:
• the federal Government
collected around 81% of taxes
• states and territories collected
around 15% of taxes
• local governments collected
around 3% of taxes
Taxation revenue by type of tax, 2012-13
Source: ABS, Taxation Revenue, Australia.
Percentages may not sum to 100 per cent because of rounding.
Personal income
tax
39%
Company tax
19%
Fuel taxes
4%
Other federal
taxes
7%
GST
12%
Payroll taxes
5%
Stamp duties and
insurance taxes
5%
Other state
taxes
5%
Local govt
rates
3%
4. 3
Australia relies more heavily on personal and corporate income taxes than most other developed
countries, and some regional competitors
Unlike most other developed countries, Australia does not have any ‘social security contributions’
levied on individual earnings. But states and territories levy payroll tax on employee remuneration
(above a threshold).
Taxes on income and social security contributions plus payroll taxes as a percentage of total taxation
OECD and selected Asian economies, 2012 1
Source: OECD, Revenue Statistics; OECD, Revenue Statistics in Asian Countries; Treasury estimates using IMF, Government Finance Statistics and Centre for Monitoring
the Indian Economy database.
0
20
40
60
80
0
20
40
60
80
Denmark
Australia
NewZealand
Norway
UnitedStates
Canada
Switzerland
Iceland
Ireland
Chile
UnitedKingdom
Luxembourg
Belgium
Sweden
Finland
Italy
Japan
Israel
Germany
Spain
Korea
Austria
Portugal
Mexico
Netherlands
Greece
France
Turkey
Estonia
Poland
CzechRepublic
Slovenia
SlovakRepublic
Hungary
Malaysia
HongKong
Singapore
Indonesia
China
India
Per cent of taxPer cent of tax
Personal and company income taxes Social security contributions and payroll taxes
Direct taxes on income, earnings and payroll
5. Australia’s reliance on personal and company income taxes has remained
largely unchanged since the 1950s, despite significant changes to the
economy.2
4
The composition of Australia’s taxes over time
Personal
income tax
34%
Company
tax 15%
Other
federal
taxes
37%
State and
local taxes
14%
1950s
Source: RBA, Australian Economic Statistics 1949-50 to 1994-95; ABS, Taxation Revenue.
Personal
income tax
39%
Company
tax 19%
Other
federal
taxes
11%
GST
12%
State and
local taxes
19%
2012-13
6. State taxing and spending responsibilities
5
State and territory government expenses and own source revenue, 2013-14 3
Source: Treasury calculations based on state and territory 2013-14 final budget outcomes (or equivalent) and state and
territory 2014-15 budgets.
In Australia, the federal
Government raises more
revenue than it spends on
its own programmes, whilst
the states and territories
raise less revenue than they
need to fund their
programmes. This gap is
referred to as vertical fiscal
imbalance (VFI).
About 45 per cent of state
and territory revenue
comes from the federal
Government, including the
GST.
Australia’s degree of VFI is
high by international
standards.
Other expenses
Health
Education
Transport and
communications
Public order and
safety
Own source tax
revenue
Sales of goods
and services
Other revenue
Royalties
0
50
100
150
200
250
0
50
100
150
200
250
State expenses by function State own-source revenue
$billion
Thousands
$billion
Vertical
fiscal
imbalance
7. Notes
1. Taxes on income are based on the OECD (series 1000) and IMF classifications (series 11). Direct taxes include
personal and corporate income taxes (OECD series 1000), social security contributions (OECD series 2000) and
payroll and workforce taxes (OECD series 3000), but does not include other compulsory non-tax payments (such as
the Superannuation Guarantee). Estimates for China, Hong Kong and Singapore have been prepared using the
IMF’s Government Finance Statistics, while estimates for India have been prepared using the CMIE database. These
estimates are not directly comparable to OECD statistics. Unlike the OECD, the IMF does not classify social security
contributions as a tax. To improve comparability with OECD statistics, direct and total taxation estimates are
prepared using IMF data but inclusive of social security contributions. Statistics for China are for 2011 and for India
are for 2011-12.
2. The RBA (1950s) and ABS (2012-13) data sources used to construct the state and local shares have some very
minor differences, mainly relating to the coverage of ‘Stamp duties’ and ‘All other’ taxes.
3. ‘Sales of goods and services’ includes user charging on state provided services. For the purpose of this chart the
distribution of GST revenue is not considered state own source revenue. ‘Own source tax revenue’ includes stamp
duties on conveyances, land tax, other property taxes, and payroll tax, among other state taxes.
