The budget is fast approaching and the Abbott government is flagging a deficit reduction levy (tax) and / or an increase in personal income taxes as it works furiously to return the budget to surplus.
This got me thinking about high taxes and which side of politics resorts to tax revenue in its budgetary planning.
Here, in order, are the highest tax to GDP ratios that have been recorded. Here are the Top 10.
RANK LEVEL YEAR PRIME MINISTER
1. 24.2% 2004-05 HOWARD
2. 24.2% 2005-06 HOWARD
3. 24.1% 2000-01 HOWARD
4. 24.0% 2002-03 HOWARD
5. 23.9% 2003-04 HOWARD
6. 23.7% 2006-07 HOWARD
7. 23.6% 2007-08 HOWARD
8. 23.2% 1986-87 HAWKE
9. 23.2% 2001-02 HOWARD
10. 23.1% 1987-88 HAWKE
The top 7 go to the Howard government which takes the cake for the highest taxing government in Australia’s history.
It will be interesting to see if Mr Abbott’s resorts to tax to return to surplus and whether this sees his government move into the Top 10 or even threaten Mr Howard for the number 1 spot.
According to Mr Hockey’s MYEFO document from December 2013 (which is the source of the above data), the government is on track to have the tax to GDP ratio at 22.9% of GDP by 2016-17.
- 1% of GDP in 2014-15 dollar terms is approximately $17 billion.
- In 2010-11, the tax to GDP ratio fell to 20.0% of GDP, some 4.2% below the Howard peak. The budget deficit in that year was 3.6% of GDP. If the Gillard government had the same tax receipts as Howard, other things equal, there would have been a budget surplus in that year and every year since.