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This article is from the soc.culture.australian FAQ, by Stephen Wales with numerous contributions by others.

8.4.4 Indirect taxes [DlC]

Compared to many western countries, particularly those with general
Goods and Services Taxes (GSTs or VATs), Australia does not have much
sales tax. The biggest source of government revenue is Income Tax.
Australia and the US share the place for having the lowest taxation as
a percentage of GDP of any major Western economies (27%). Yet despite
this we have one of the highest rates of personal income tax. The
main reason is the low rate (overall) of sales tax and "shock horror"
customs duties.

But unlike many western countries the rates that sales tax is charged,
in Australia, varies substantially. Less than 50% of all goods and
services (in dollar values) do not have any sales tax at all. For
example food, health, rent, education, power, water, are all exempt.
Ie those items deemed essential. Where tax is levied, it is levied,
at least officially, by the Federal Government (I'll return to this).
Most goods (no services are taxed) are taxed at 21%. I've read that
the figure is something like 80% of goods which are taxed are taxed at
this rate.

Some goods are taxed at higher rates for a range of reasons. For
example the taxes on cigarettes are very high, supposedly for health
reasons. I don't know what the rate is, but I suspect it is much
higher than 37%. Some items which are taxed at levels higher than 21%
include luxury cars (cars whose purchase price exceeds $A45,000),
expensive liquors, and beer (wine is only 15% but it will move to 25%
- was that the eventual compromise?), petrol, luxury boats. In each
case there is an official motive, eg it is considered a good idea by
many to make petrol expensive, to encourage people to use public
transport. Can anyone explain to me why wine should be taxed less
than beer, is it because the middle class (ie Democrat, Liberal and
Green voters) drink the former and the working class drink the latter?
[How's that for flame bait?]

The number of items that have sales tax is always growing, and there
has been a slow consolidation of the various rates into a general rate
of 21%. In the early 80s our current prime minister was treasurer and
he attempted to introduce an across the board goods(not services)tax.
Many people have quipped that over the last 10 years the Prime
Minister has achieved his original aim by stealth. This attempt was
unsuccessful. The opposition, who recently proposed, unsuccessfully, a
GST, rolled the governments original proposal by bringing out a legion
of people to say, "You mean my cornflakes will go up by $0.50.....".
Needless to say the same tactics were then employed by the current
government to roll the opposition. Quid pro quo?

[JB] Vary widely, ranging from about 70% on petrol to 0% on most foodstuffs,
books, clothing, etc. Averages about 5% across all purchases.

 

Continue to:

• prev: 8.4.3 Corporate taxation [JB]
• Index
• next: 8.4.5 State taxes

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