Treasurer Josh Frydenberg and his Coalition predecessors have been telling Australian voters that the Coalition parties stand for lower taxes and that the tax take is always higher under Labor.
This is not true. It has not been true since 1975.
Taxation as a percentage of gross domestic product (GDP) has been higher under Coalition governments since the Fraser years. It reached an all-time high during John Howard’s tenure.
We know this from Frydenberg’s own agencies — annual reports from the Australian Taxation Office (ATO), the Taxation Revenue files published by the Bureau of Statistics (ABS), and Treasury’s Mid-Year Economic and Fiscal Outlook (MYEFO).
More significantly for most Australians, these agencies confirm a substantial shift under the current Coalition away from collecting revenue from the highly profitable big corporations towards fleecing wage- and salary-earners.
Total taxes collected
Last month’s MYEFO shows taxes collected relative to GDP from 1971 when Les Bury was Billy McMahon’s treasurer. Total taxes then were 17.8%. This increased through the tumultuous Whitlam years to 19.8% of GDP in 1975, then rose further through the Fraser period, peaking at 21.7% in 1983.
As Paul Keating’s reforms took effect through the Hawke/Keating years, the rate fluctuated between 20.0% and 23.2%, settling at 21.9% when Labor lost office in 1996.
It then increased steeply under Howard and Peter Costello, hitting all-time highs of 24.1% in 2001 and 24.2% in 2005 and 2006. Under Labor, the take then declined markedly, dropping to 19.9% in 2011, the lowest in 33 years. The rate took off again after Labor lost office in 2013. (See the chart below.)
Total tax to GDP rose to 23% under Frydenberg in the year to June 2019, the highest since Howard’s tenure.
Increase in contributions from individuals
Over the past eight years, the burden on individual taxpayers has risen while the impost on companies declined. This seems extraordinary, given the phenomenal surge in corporate profits since 2014. But it is true.
ATO reports show the lowest proportion of taxes collected from individuals was in the first year of the Rudd Labor government, at 45.7% of all taxes collected. Credit for this — assuming low taxes are desirable — belongs to the Howard government which cut income tax rates in its dying days.
Collections stayed relatively constant through the Rudd years, as Wayne Swan believed stable tax revenue was necessary to deal with the global financial crisis, a good call as it turned out.
Throughout the eight years from 2006 to 2013, the average take from salaried workers was 47.7%. Under the Coalition this rose abruptly, despite promises to lower taxes. The take from individuals hit a 15-year high of 52.8% in 2015 and rose again the following year to 54.6%. It reached another zenith in 2020 of 54.8%. The average over the past eight years is 52.9% — waaaaay higher than under Labor.
Decline in company contributions
The last full year of the Howard government, 2007, was when corporations paid the highest proportion of the total tax take on record: 22.8%. Again, this stayed fairly stable through the late Howard period and the Labor years, averaging 21.8% from 2006 to 2013.
Then came the Abbott government, with the new PM promising “lower taxes, lower spending and smaller government”. The corporations took this to heart and many stopped paying tax altogether, as documented by the ATO’s annual transparency reports.
The percentage of the total tax take contributed by companies fell to 19.9 in 2015 and to a lowly 18.3 the next year.
Company tax relative to profits
Lower taxes from companies are absolutely fair enough when businesses are doing it tough. But in recent years company profits have soared, notably in the export sector as commodity prices have reached record highs and demand risen inexorably.
Company tax collected as a percentage of gross operating profits, shown in ABS file 5676 table 11, averaged 25.8% over the eight years 2006 to 2013. The highest was 29.4% in 2007. That’s pretty close to the statutory 30% corporate tax rate. This tumbled through the Coalition years to average just 21.2% over the past eight years.
Media connivance
Here’s another fun statistic: since Christmas, Josh Frydenberg has given 36 face-to-face interviews; all contain assertions on taxation or related economic outcomes which are easily shown by data from his own departments to be blatantly false. Times he has got away with his deceptions unchallenged is — surprise, surprise — 100%.
