ABS Reveals Australian Tax Take Leap

by Mary Swire, Tax-News.com, Hong Kong

15 April 2002

The Australian Bureau of Statistics revealed last week that tax collected by all levels of government jumped 9% in the first year of the GST, an announcement which will doubtless add fuel to the opposition Labor party's campaign to expose the Howard government as the highest taxing administration in the course of Commonwealth history.

According to ABS figures, total tax collected in Australia in fiscal 2000/01 rose to $213.77 billion, compared with $196.15 billion for the previous year. Total tax collection as a proportion of GDP was at 31.8% in the first year of the goods and services tax, compared with 31.2% in 1999/00.

The Australian Bureau of Statistics explained, on the release of the figures, that although the growth was in part due to the GST introduction, growth in tax collected from enterprises, and increases in excises and levies also played a part. However, the body revealed that the increased revenue had been partially offset by lower income tax collections, the abolition of wholesale sales tax, lower gambling tax collections, and the end of franchise taxes.

Meanwhile, a key taxation body has warned the government that work on a new way to calculate corporate taxes should be halted, arguing that the proposed model will not improve the lot of businesses based in Australia.

The Tax Value Method, which was a recommendation contained in the 1999 Ralph Review of Business Taxation, calculates taxable income using the gain or loss in the value of a business's assets, including cash. It was developed to reduce the size and complexity of the two existing Income Tax Assessment Acts.

However, the Taxation Institute of Australia has called for the Australian authorities to abandon the idea, arguing that the possible benefits do not outweigh the certain disruption and intial increase in compliance costs for Australian businesses.

'The Taxation Institute remains committed to participating in the reform process,' it explained. 'However, TVM is not the solution to the problems with the tax system.'

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