In a report released on Tuesday 17th April, The Australia Institute researchers Rod Campbell and Cameron Murray call for a stronger revenue base through increased taxes.

The report finds that, of the 35 OECD members:

  • Just seven countries collect less tax per unit of GDP: Mexico, Chile, Ireland, Turkey, USA, Korea and Switzerland.
  • Australia’s tax to GDP ratio is 28.2%, well below the OECD average of 34.4%, let alone Denmark with 45.9%.
  • Australia’s tax to GDP ratio was higher than at present from 1996 to 2007, the entire Howard era.

“Our tax debates focus on the rates of particular taxes, rarely taking a step back and asking overall are we raising enough money to fund the kind of country we want,” said Ben Oquist, Executive Director of The Australia Institute.

“IMF head Christine Lagarde has specifically warned of a potential race to the bottom on taxes that would ultimately see government revenue denuded across all countries.

The report concludes that increasing Australia’s tax to GDP ratio to levels comparable to New Zealand or the UK would have a major impact on the budget and funding of social services and infrastructure.

“A strong revenue base is just as important for corporate Australia. Ultimately business will best flourish if a decent, cohesive society is maintained,” Oquist said.

The report is accompanied by an open letter by prominent economists and public figures calling upon the government to “reject a tax cuts race to the bottom, and instead focus on tackling tax avoidance, closing tax loopholes, and unfair tax concessions in order to build a stronger revenue base for the nation” in the lead-up to the May budget.

(Source: Press Release | Read the Report)

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