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REJOICE! TAX FREEDOM DAY IS THURSDAY, 23 APRIL
Australians will spend the first 112 days of this year working for the government. “April 23 marks the first day Australians will start working for themselves, or Tax Freedom Day,” according to Centre for Independent Studies economist, Dr Oliver Hartwich.
Total tax revenue for all levels of government as a share of gross domestic product (GDP) rose from 30.5% in 2006-07 to 30.8% in 2007-08. Australians thus spend nearly 31% of the year working for the government.
The federal government’s taxes rose from 25.1% to 25.2% of GDP over the same period, so Australians spend just over one-quarter of the year working for Canberra. In absolute terms, federal taxes rose 9% compared to 2006-07, representing 82% of all the taxes collected in Australia.
“However, the worst is yet to come,” says Dr Oliver Hartwich of the Centre for Independent Studies.
“The federal government will run budget deficits of close to three per cent of GDP over the next few years. This unfunded spending will eventually have to be paid for through even higher taxes, pushing future Tax Freedom Days into early May.”
“Australians will soon discover that fiscal stimulus measures are not a free lunch,” Dr Hartwich said.
This year state and local taxes remained steady at 5.6% of GDP, but state taxes rose 8.6% in absolute terms, while local government taxes rose 7.8%.
Taxes at all levels of government represented $16,401 for every man, woman and child in Australia in 2007-08. Of that amount, $13,451 went to Canberra, while an average $2,972 went to state and local governments.
In per capita terms, taxes for all levels of government rose 7.1% in 2007-08. Commonwealth taxes rose 7.2% on a per capita basis, while state and local taxes rose 6.6%.
“The figures show that the total tax burden is increasing relative to the size of both the Australian economy and population,” Dr Hartwich said.
“Tax revenue is also growing much faster than the rate of inflation, so the real tax burden is also increasing.”
“In addition to the time spent working for the government, Australians will spend a further 5.9 hours on average completing their income tax return and spend $268 managing their tax affairs, based on Australian Tax Office estimates.”
Dr Oliver Hartwich is a Research Fellow at the Centre for Independent Studies and is available for comment.
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