Tax chartactular

Cross posted with permission from Mark the Graph:

A week ago I posted on the tax table in the National Accounts. At that time I noted the drop in taxes paid by residential corporations. In response to the post, some people commented that I should present the taxes paid as a proportion of nominal GDP.

In today’s Australian, the the drop off in taxes paid by corporations was noted by David Uren.

Last week’s national accounts show company tax payments have fallen from an all-time peak of 6.2 per cent of gross domestic product in 2007 as Peter Costello delivered his last budget, to just 3.8 per cent in the June quarter.

This is the lowest share since September 1996, when Costello delivered his first budget. It is less than during the global financial crisis and erodes all the gains in corporate taxation tapped by both governments to finance personal tax cuts, increased family benefits, higher pensions, greater education spending and much more during the past 16 years. No wonder the budget is in deficit.

For completeness, attached are a set of charts from table 18 in the National Accounts, with the tax take presented as a proportion of nominal GDP for the quarter. Enjoy!
























  1. A couple of points I’d like to make: income taxes on individuals have slumped almost as badly as company tax. And GST has not proved to be the growth tax it was once touted as. (Why? is the black economy growing?)

    To complete the picture of what is happening in the economy, it would be great to have household saving as a percentage of GDP, business investment as a percentage of GDP and government spending as a percentage of GDP.

    Finally, a question: what is Taxes on Income – Individuals – Other?

    • Taxes on Income – Individuals – Other is probably taxes raised on individual income that is not wages, i.e. earnings of contractors and passive investment income such as dividends/interest.

      I don’t think that the GST is performing below expectations because of the black economy. It’s more likely to be because key areas of expenditure (health, education, certain elements of housing and food) are not subject to GST.

      Funnily enough, these are also the areas of expenditure that have been growing faster-than-CPI over the last 12 years.

      So inevitably, an increasing proportion of total final expenditure is falling outside the GST system.

  2. Interesting that the total of all taxes shows around 27%, but what about State & Local council rates & taxes? The total figure does not sound correct to me.

  3. Diogenes the CynicMEMBER

    Great charts and analysis.

    Capital losses accumulated from the GFC must be causing some of the weakness in both individual and company tax returns – large gains would have been reported for most in 2006, 2007 and 2008. It will take a while for them to wash through…I have seen predictions of as much as a decade but I guess it depends on whether our asset markets have another bull run (not my prediction for the near term mind you).