Income tax in Australia’s tax system - Busting the myth that Australia

Despite repeated claims by business groups that Australia needs to reduce the share that income tax makes up of total tax revenue, the reality is that Australia is a low-tax country when compared with other developed (OECD) countries, and one of the least reliant on income taxes. [...] When comparing taxation levels in different countries, the most common method is to look at the amount of tax collected as a proportion of GDP, a metric that is also known as the tax to GDP ratio. [...] If the concern about over-reliance on income tax is that it creates a disincentive to work, then it is the overall level of income tax that is important, not how the amount of income tax collected compares to the amount of non-income tax collected. [...] In other words, in Australia the take- home pay of an average single worker, after tax and benefits, was 77.0% of their gross wage, compared with the OECD average of 75.4%.8 By contrast for Germany the OECD concluded: In Germany, the average single worker faced a net average tax rate of 37.4% in 2022, compared with the OECD average of 24.6%. [...] In other words, in Germany the take- home pay of an average single worker, after tax and benefits, was 62.6% of their gross wage, compared with the OECD average of 75.4%.9 Including social security contributions when calculating the amount of tax paid by workers on their income, but then excluding them when calculating the amount of income tax levied by governments on workers, is not presenting an.