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Australia relies more heavily on personal income tax than almost any other OECD country. The government collects more than half of federal tax revenue through personal income taxes.
Personal income taxes are also designed to grow rapidly over time because marginal tax thresholds are fixed, and bracket creep via inflation increases average tax rates.
Meanwhile, tax receipts from indirect sources like excises are shrinking as consumers shift to untaxed illegal tobacco and electric vehicles.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.