I think that most people may agree that we do pay too much in personal income taxes or at the very least they may agree that they would prefer to pay less on their taxes if it was sustainable.
Below are the personal income tax rates of Australia and three other countries: USA, Canada and Japan. This allows us to compare what some other countries are taxing their citizens. All rates have been converted to Australian dollars (except for the USA) to help us to easily compare values on an Australian dollar basis:
AUSTRALIA
$ EARNED TAX RATE PAID
$0 – $18,200 0%
$18,201-$37,000 19%
$37,001-$80,000 32.5%
$80,001-$180,000 37.0%
$180,001+ 47.0%
Plus add an extra 2.0% Medicare Levy to all of the above figures.
USA
$ EARNED TAX RATE PAID
$0-$9,075 10%
$9,075-$36,900 15%
$36,900 – $89,350 25%
$89,350 – $186,350 28%
$186,350 – $405,100 33%
$405,100 – $406,750 35%
$406,750+ 39.6%
JAPAN
$ EARNED (converted to $AUD) TAX RATE PAID
$0 – $19,500 5%
$19,500 – $33,000 10%
$33,000 – $69,500 20%
$69,500 – $90,000 23%
$90,000 – $180,000 33%
$180,000+ 40%
CANADA
$ EARNED (converted to $AUD) TAX RATE PAID
$0 – $43,953 15%
$43,953 – $87,907 22%
$87,907 – $136,270 26%
$136,270+ 29%
So it seems to me that countries such as the USA, Japan and Canada are taxing their citizens less in personal income tax than what we are being taxed here at home. So could we be taxed on our personal incomes at the same rate as the Canadians? I would guess that the only way that we could ever achieve this is if the Government were to either (a) spend less money or (b) make more money from some other area other than from personal income taxes.
In the financial year 2010/2011 Total Welfare expenditure in Australia was $316 Billion and this accounted for 65% of total government expenditure. Of the $316 Billion the amount that was spent solely on social security payments was $130 Billion *.
Currently we have one in five Australians receiving income support. Do we have room to have a look at the people who are out of work and in receipt of fortnightly social security payments and see if it is possible to scale the payments back a bit after a period of time? I think that it is wonderful that we can provide welfare to people who are say retired from the workforce and have reached the retirement age and to people who cannot work due to either physical or mental disability. But I also believe that we may be too generous with the general unemployed Australian that is receiving a welfare payment year in year out.
On the topic of “can the government make the money it needs from another area” – Our GST is currently at 10% and most basic food and numerous other things are GST exempt, and it is earning us $50 Billion per year. Would making the GST a truly broad based consumption tax and thereby having all food subject to GST, and also increasing it to say 15 or 20% do the trick? Could the government then lower our personal income taxes? I don’t know but I would prefer to be taxed less on my personal income tax – like the Canadians for example – and pay a little more tax when I buy something, so the more I buy the more tax I would pay and the less I buy the less tax I would pay. Also whenever tourists from overseas visited Australia they would be paying more in taxes and thereby assisting us a little more as well.
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