A report analysing the trends in Australia’s federal tax system since 2001 has been issued by the Parliamentary Budget Office.
Among other things, the report identifies a fall in company tax receipts as a significant change owing to investments being concentrated in capital intensive industries which have greater carried forward losses to offset income.
The report predicts the downward pressure on company tax receipts will continue due to policy changes, although carried forward losses having been exhausted in the resource industry could slow this down. It also expects an increase in personal income tax receipts owing to bracket creep and lower GST revenues due to consumer behaviour. Other risks to revenue identified include the growing sharing economy that make personal tax receipts more volatile.
The report concludes that based on current policy settings, taxes on consumption will trend downwards, taxes on capital will remain or fall and more labour income will be taxed at a lower rate via the superannuation system. In the absence of other tax reforms, Australia’s federal tax revenue would therefore increasingly rely on labour income through the personal tax system.
Source: Parliamentary Budget Office Report: Trends affecting the sustainability of Commonwealth taxes, Report No 02/2018.