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Tuesday, 2 May 1989
Page: 1555


Senator CHILDS —My question is directed to the Minister representing the Treasurer. Did the Minister see an article in the Australian newspaper of 19 April headlined `Consumption tax ``essential'' '? Can the Minister shed any light on the accuracy of the statement made in that article that `Australia has the highest relative reliance on personal income tax of any country in the Western world'?


Senator WALSH —Mr President, I did see the article. The statement that Senator Childs quoted was attributed to Mr Peter Middleton, acting in his capacity as President of the Institute of Chartered Accountants, and it ought to concern anybody who is interested in sensible debate on such questions in Australia. One would have hoped that an official of the Institute of Chartered Accountants would check his facts before making such sweeping assertions. It is not clear from the article exactly what Mr Middleton had in mind by `relative reliance on personal income tax'. If he meant personal income tax as a proportion of gross domestic product (GDP), he was very wide of the mark. I have a table derived from the Organisation for Economic Cooperation and Development (OECD) for calendar year 1985. There may have been some minor changes since 1985 but they would not affect the conclusions. I seek leave to incorporate that table in Hansard.

Leave granted.

The table read as follows-

Table 7.2

TAX REVENUES IN OECD COUNTRIES* 1985

(as percentages of GDP)

Personal

income(a)

Payroll(a)

Goods

and

services

Total(b)

Australia

13.7

1.7

9.8

30.3

Austria

16.6

9.1

13.8

42.5

Belgium

23.2

8.3

11.4

46.9

Canada

13.3

2.8

10.4

33.1

Denmark

25.7

1.3

16.8

49.2

Finland

17.4

3.6

13.7

37.3

France

12.8

13.8

13.4

45.6

Germany

17.4

7.2

9.7

37.8

Greece

11.9

5.7

15.2

35.1

Ireland

14.4

4.6

17.4

39.1

Italy

12.8

8.8

8.8

34.7

Japan

11.1

4.3

3.9

28.0

Luxembourg

16.3

6.0

10.2

42.8

Netherlands

20.6

7.9

11.6

45.0

New Zealand

20.6

0.2

8.0

34.3

Norway

13.9

6.8

17.9

47.8

Portugal

na

5.4

13.2

31.1

Spain

9.6

8.9

7.6

28.8

Sweden

20.0

14.2

13.3

50.5

Switzerland

18.3

3.2

6.1

32.1

Turkey

5.6

0.6

7.1

16.1

UK

13.2

3.4

12.0

38.1

USA

13.9

5.1

5.2

29.2

a. Payroll taxation includes compulsory social security contributions levied on employers, while personal income taxation includes compulsory social security contributions levied on employees, the self-employed and non-employed persons.

b. Includes company taxes, property taxes, etc. in addition to the sum of the first three columns.

b. * Note that these figures are for total tax revenues and cover all the tiers of government in each country.

b. * Source: OECD, Revenue Statistics of OECD Member Countries, 1965-86, OECD Paris, 1987.


Senator Messner —Will you incorporate the social security levy?


Senator WALSH —I am coming to that. The table shows personal income tax and payroll tax separately and the honourable senator will have a chance to look at it. It shows that, as a proportion of GDP, Australia is less reliant on personal income taxes than 13 of the 21 OECD countries for which data are available. If he meant personal income tax as a percentage of total tax collections, he is closer to the mark but still wrong. I have not checked through all the OECD countries' figures but, clearly, West Germany, the Netherlands, Denmark and Belgium are at least some Western countries which, on this definition, are relatively more reliant on personal income tax than is Australia-`relatively more reliant' in this context meaning personal income taxes making a greater contribution to total tax collections.

I want to make one final observation about Mr Middleton's reported statements. If he has been accurately reported, he seemed to be asserting that whatever tax mix happens to exist in the Western world, or would be the norm in the Western world, is the tax mix to which Australia should move towards. One of the consequences of that is that the Western world norm is to place much greater reliance on payroll tax than Australia does. It would be interesting to know whether Mr Middleton believes that that example or norm should be replicated in Australia.