Pre-Budget Attitudes on Tax

Australia Institute

New research undertaken in the lead-up to the Budget shows Australians have a more sophisticated approach to taxation than is often understood.

The Australia Institute surveyed a nationally representative sample of 1,000 Australians between 5th-7th May 2021 about their attitudes towards tax and budget priorities.

The results show that most Australians agree with positive statements about taxation, and would prefer additional government spending to tax cuts or deficit reduction.

  • Seven in ten Australians (69%) agree with Oliver Wendell Holmes’ quote that ‘taxes are what we pay for a civilised society.’
  • More than six in ten (61%) agree with the broader statement that ‘tax is good.’
  • Spending on government services like health and education was the single most popular priority, chosen by more than one in three Australians (36%).
  • Decreasing the deficit and repaying debt was the least popular, chosen by just 9% of Australians.

“The research shows Australians have a more sophisticated approach to taxation than is often understood,” said Ben Oquist, Executive Director of the Australia Institute.

“Australia is a low taxing country. The evidence globally is that in general countries with higher levels of taxation have higher average incomes and higher quality government services and infrastructure.”

“Internationally the debate on tax has changed. US Treasury Secretary Janet Yellen has, for example, warned about a global race to the bottom on company tax.

“As Australia comes out of recession we will need a better and bigger debate about taxation. This should include addressing the level and distribution of various tax concessions which overwhelmingly benefit wealthier Australians, can often be of minimal economic benefit and produce poor social and environmental outcomes.”

Background: Australia is a low taxing country

  • FACT: Australia is the 5th lowest taxing country out of 35 OECD countries, above Switzerland, the US, Ireland, and Mexico.[i]
  • The federal tax to GDP ratio was 23% (28.4% all levels of govt) for 2019-20. The average tax to GDP ratio under Howard was 23.4% with the final budget 23.8%.[ii]
  • If the OECD average (33.8%) applied, revenue would be higher by $105 billion.[iii](This is based on comparing all levels of government in Australia and the OECD.)
  • Higher levels of taxation are correlated with higher average income.[iv]
  • Higher taxing countries have higher welfare measures.[v]

[i] OECD (2020) Revenue Statistics 2020 – Australia, https://www.oecd.org/tax/revenue-statistics-australia.pdf; OECD (2021) General government revenue (indictor), https://data.oecd.org/gga/general-government-revenue.htm#indicator-chart

[ii] ABS (2020) 5204.0 Australian System of National Accounts, 2019-20 financial year, Table 1, https://www.abs.gov.au/statistics/economy/national-accounts/australian-system-national-accounts/2019-20; ABS (2020) Government Finance Statistics, Australia, Dec 2020, https://www.abs.gov.au/statistics/economy/government/government-finance-statistics-australia/dec-2020

[iii] OECD (2020) Revenue Statistics 2020 – Australia

[iv] Nordic Policy Centre (2020) Tax and wellbeing: the impact of taxation on economic wellbeing, https://australiainstitute.org.au/report/tax-and-wellbeing-the-impact-of-taxation-on-economic-wellbeing/

[v] Nordic Policy Centre (2020) Tax and wellbeing: the impact of taxation on economic wellbeing

/Public Release. This material comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length. View in full here.