09/07/2015 - 10:43

Boom years brought widespread benefit

09/07/2015 - 10:43

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The benefits of the nation's mining boom years appear to have benefited those on lower incomes more than initially thought, and the nation is one of the most reliant on income taxes, according to a report recently released by the OECD.

Boom years brought widespread benefit
The four years to 2011 were a good period for low income earners.

The benefits of the nation's mining boom years appear to have benefited those on lower incomes more than initially thought, and the nation is one of the most reliant on income taxes, according to a report recently released by the OECD.

The surprising results covered the four years to 2011, the latest year for which analysis was available, and included the impact of the global financial crisis.

The report, ‘Government at a Glance’ 2015 found that across all brackets, household disposable income increased 0.8 per cent on average annually.

However, the lowest 10 per cent improved disposable income by 1.6 per cent annually, while the top 10 per cent saw their disposable income fall 0.5 per cent.

What isn’t clear is how much the numbers were driven by welfare and tax changes, redistribution, the financial crisis or directly from the resources boom, but the trend for the period was strong.

Notably, Australia is one of the least redistributive governments in the OECD.

The top performer for the period was the Slovak Republic, with annual disposable income growth of 4.2 per cent, while amost half of the developed nations went backwards.

In terms of government revenue, Australia was one of the developed countries most reliant on income taxation, putting urgency behind the federal government’s review of the taxation system.

In 2012, 58.1 per cent of revenue was provided through income and profits based taxes, second only to Denmark, at 61.9 per cent.

Australia was also one of the most reliant on property taxes, at 8.6 per cent of revenue, and least reliant on consumption taxes, at 28.1 per cent.

Modelling by economists, including recently by KPMG and previously in the Henry Review, suggests that taxes levied on consumption, such as the GST, and land, such as council rates, are much lower cost to society than income or profit-based taxes.

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