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Friday, 1 May 1987
Page: 2189


Senator MAGUIRE —I direct the attention of the Minister representing the Minister for Employment and Industrial Relations to the survey of major labour costs published yesterday and to the Minister's answer to a question by Senator Chaney. What light do the figures in the survey shed on the level in this country of payroll taxation, which is the dominant form of State government taxation in Australia, compared with other developed industrialised countries? Is it possible that payroll tax is not borne fully by employers but is simply passed on to consumers?


Senator WALSH —It is possible that payroll tax would not be borne fully by employers but would be passed on to consumers. I am almost certain that that would happen to some extent, as almost any corporate tax, at least in part, gets passed on to consumers in the form of higher prices. The extent to which that happens is very much a matter for judgment or even conjecture. I mentioned earlier in Question Time that the survey by the Australian Bureau of Statistics of on-costs measured only three major on-costs of payroll tax, workers compensation and employer superannuation costs, which makes the figure not strictly comparable to either the Confederation of Australian Industry figure of 29.3 per cent, which embraced a much more comprehensive set of wage on-costs, or the 15-country Organisation for Economic Co-operation and Development average of 35 per cent, which I think was roughly comparable to the CAI definition of on-costs. However, at this stage I am not quite certain of that either. There are problems of definition, measurement and also response costs in terms of getting information on other labour on-costs. I understand that the ABS will mount a survey to collect that type of data in the near future. It is worth noting, however, that the costs which are measured-I mentioned this earlier in Question Time also-by the ABS are consistent with that component of the CAI survey which measures the same thing.

The OECD figure of 35 per cent includes social security-type taxes which are levied on the employer. In the first instance, there is a charge on the employer, like a payroll tax, which has an effect on a firm's total taxation bill like any other corporate tax, a fact which is frequently overlooked by those who comment on the level of corporate taxation in Australia; that is, the level of payroll tax, or payroll tax equivalents in the form of a social security tax, is levied at a very much lower rate on business in Australia than it is in many European and other countries. Therefore, it is quite wrong and misleading to compare corporate tax rates between those countries and Australia without taking into account the other taxes which are levied on business. It is a convenient piece of propaganda for people who have a particular political axe to grind, such as Mr Elliott, but it certainly does not add much to the sum of human knowledge or understanding of this rather complex issue.

I have a table on that subject which gives a sample of payroll taxes which are levied in Australia and a number of other countries. Payroll taxes levied in Australia average out at 1.8 per cent; in Germany, 7 per cent; in France, 14 per cent; in Japan, 4.2 per cent and the United States of America, 4.9 per cent. When the whole tax situation is considered, Australia is not a high business tax country. As to tax revenues as a proportion of gross domestic product, not as a proportion of wages-that applies to the earlier figures too-in the calendar year 1983 Australia had a total of 30 per cent; France, 44.6 per cent; Italy, 40.6 per cent; Norway, 46.6 per cent; the United States, 29 per cent, almost identical to Australia, it should be noted; and the United Kingdom, 37.8 per cent.