Data from the OECD shows Australia recorded the biggest increase to average tax rates in the developed world last year due to bracket creep and the end of a tax offset, but a separate report finds Australia is still a relatively low-taxing nation.
Australia's average income tax rate increased by 7.6 per cent in 2023, the largest out of any developed country in the world.
The OECD said the 7.6 per cent increase occurred for two reasons: the end of a tax offset, and bracket creep.Australia's tax system is stacked so heavily against younger people that it's threatening the social compact, former Treasury secretary Ken Henry has warned.
Comparatively, those earning two-thirds of the average wage in 2022 had a much lower income tax burden of 17.2 per cent, or $11,033. Those tax cuts, passed by the Coalition government in 2018 and 2019, would have resulted in large tax cuts for upper-middle and high-income earners, modest tax cuts for middle-income earners and no tax cuts at all for many low-income earners.
In a separate report published on Friday examining Australia's reliance on income tax, Mr Grudnoff said that "trick" is the OECD's exclusion of social security contributions."Excluding social security contributions from income tax might help to make it look like Australians pay a high amount of income tax relative to others in the OECD, but it is not an accurate way to compare countries," Mr Grudnoff said.
When taken into account, Australia is the ninth-lowest-taxed nation at 29.2 per cent — significantly reducing its total tax burden and putting it well below the OECD average of 34.8 per cent. Given this, he said the reality was that Australia was a low-tax country compared to other OECD nations, and one of the least reliant on income taxes."Australia sits well below the OECD average when it comes to both income taxes and the amount of tax collected overall."Fact check: Have personal income taxes risen by a 'record' 23 per cent under Anthony Albanese?
Oecd Income Tax Stage 3 Tax Cuts Tax Cuts Inflation Taxing Wages Lmito Bracket Creep
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