Surely I’m not the only person who has to fight off waves of ill
feeling every time an earnest face appears on the television to tell us
that Australians are lightly taxed. Have these people ever worked in
government? Do they know what we waste money on? Jeez! Don’t they even
look at their payslips?

Enough – because the Centre for Independent Studies are wheeling out
something today that tackles the symptoms, if not the causes.

“Advocates of higher taxation often point to OECD figures suggesting
Australia enjoys lower than average tax levels,” the CIS says, “but
these claims are misleading”.

Peter Burn, National Senior Advisor on Economics and Industry Policy at
the Australian Industry Group argues in a paper for the CIS that a
careful reading of OECD statistics shows Australian tax levels are on a
par with the OECD average – and that the income tax we pay is much
higher than average.

Burn points out that the OECD consists of a large number of relatively
small European countries and a small number of much larger non-European
ones, like Japan and the United States. European countries have high
taxation, and because there are lots of them, this distorts the
calculation of crude averages.

“The only possible basis for the claim that Australia is a relatively
low-taxing country is a Eurocentric one,” his paper says. “While
doubtless not deliberate, the use of the simple average of all OECD
countries institutionalises the Eurocentric perspective and gives a
distorted impression.”

Dr Burn says we must take account of the sizes of countries before
calculating average tax levels across the whole OECD. When we do this,
a very different picture emerges:

  • The level of Australian taxation is
    broadly comparable with the weighted average level of tax in all OECD
    countries, but Australia is more heavily taxed than our most important
    OECD trading partners.’
  • The make-up of taxation
    in Australia is out of line with that in the rest of the OECD, with tax
    on personal and company incomes is much higher than the weighted OECD
    average. Personal income tax is 34 per cent higher here and tax on
    corporate incomes is 117 per cent higher.

Unsurprisingly, Burns finds, “in an
increasingly global operating environment, an excessive reliance on the
most mobile tax base – the income tax base – is a competitive
disadvantage.”

Equally unsurprisingly, he also concludes that the case for reducing income taxes is compelling.

“The central focus of further reforms should be a reduction in the entrenched over-reliance on income taxation.”

Blud oath, Narelle.

No one ever expected the Howard Government to be socially liberal.
Given the way John Howard has cast himself as “The I Didn’t Do It Kid”
since the 1982 budget, a bit of economic liberalism was to be hoped for.

Alas, it seems that Howard doesn’t trust us with our own money. He prefers to spend it for us – as his election binging shows.

Yes, we all got income tax cuts when the GST was introduced, but that’s been it.

Indeed, the Howard Government seems to have put significant microeconomic reform on the backburner.

The excuse for all this has always been the Senate. That’s always been
pretty thin. Howard has always had a very powerful argument to fall
back on in the face of opposition from the ALP. He always has had the
option of contrasting the constructive way in which the Liberal Party
supported economic reform through Hawke and Keating years with the
short-term opportunism of Beazley, Crean and Latham. Indeed, it would
have been simple to take this argument one step further and ask if
Labor was disowning its own achievements.

After July 1 next year, however, the Senate excuse will cease to be. So steel yourself, PM, and have a look here.