International Comparison of
3 April 2006
© Commonwealth of Australia 2006
ISBN 0 642 74339 8
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The report is also available on the website for the study at http://comparativetaxation.treasury.gov.au
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The Hon Peter Costello MP
CANBERRA ACT 2600
We are pleased to present to you the report on the International Comparison of Australia's Taxes.
This study has provided an important opportunity to inform the public discussion about Australia's taxation arrangements. We believe that the information contained in the report delivers some significant insights into the taxation arrangements both within Australia and in other countries around the world.
The study attracted wide public interest and, although there was no formal submission process, there were over one hundred submissions, many of which raised particular taxation policy measures. We would specifically like to note the input of Deloittes, Ernst and Young, KPMG, PricewaterhouseCoopers and the Institute of Actuaries of Australia in providing assistance to determine the details of taxation arrangements in other countries.
We hope that the broader view of Australia's taxation arrangements which can be gained from this report will allow Australians the opportunity to consider the role of such measures in their international context.
R. F. E. Warburton, AO
P. W. Hendy
Terms of Reference
Terms of Reference for an overview of how Australia's tax system compares internationally
The study will compare Australia's taxation system with other countries. The aim of the study is to provide an authoritative statement on the public record about how Australian taxes compare to those in other countries. This will help inform discussion about Australia's tax system.
The focus of the study will be on the provision of objective, descriptive information on Australia's tax and revenue system compared with that of other OECD countries. The study will provide information on the overall level of taxes, the tax mix, and the base and rates within each type of tax. As appropriate, the study also will provide information on the publicly stated rationales for different countries' balances between efficiency, effectiveness and simplicity in the revenue raising effort of these countries.
The study will cover all forms of taxation collected in Australia at national, state and local government levels. This is OECD standard practice for international tax comparisons.
The study will cover personal, business, indirect, property and transaction taxes. On personal taxes, in line with the recommended OECD approach, information will be provided on taxes levied on both individuals and businesses for social insurance purposes, as well as particular forms of social benefits that can be provided through either the tax system or through social security expenditures.
The study will also cover taxes on superannuation, taking account of the very different ways that retirement income objectives are provided in other countries.
The study will make comparisons with all OECD countries, largely reflecting the availability of comprehensive and comparable information on their tax systems. These countries cover most of our largest trading partners, as well as the sources and destinations of most of our capital investment. As determined by the authors, the analysis may extend beyond the thirty OECD countries where comparable information is readily available and issues relevant to the study would benefit from a broader analysis.
For context, the study will provide an overview of the fiscal situation in each of the comparator countries. Some countries have a much larger/smaller government sector than Australia, and therefore require a higher/lower level of taxes. Additionally, information will be provided on the fiscal situation of comparator countries (especially in terms of budget surpluses or deficits).
Where relevant and possible, the study will also cover non-tax revenues and provide information on the extent and composition of tax expenditures in comparator countries.
Given the broad scope of the study, and the considerable amount of information and analysis that will need to be covered, the study necessarily will provide an overview of relevant issues for international comparisons of tax systems. Greater detail will be provided in some areas, especially on personal and business taxes.
The study is to be completed and passed to the Treasurer by 3 April 2006. Due to the short period of the study, there will be there no formal submission process. However, you can still contact the study or provide comments. Further information is available on the following website: http://comparativetaxation.treasury.gov.au.
The study will be undertaken by Mr Richard (Dick) Warburton AO and Mr Peter Hendy. It will be supported by a small secretariat from within the Treasury. The study secretariat can be contacted through the following address: ComparativeTaxation@treasury.gov.au or by ringing (02) 6263 3033.
Richard F E (Dick) Warburton, AO
Mr Warburton has been Chairman of the Board of Taxation since its inception in September 2000.
Mr Warburton is currently Chairman of Caltex Australia Ltd. His other directorships include Citibank Pty Ltd, Tandou Ltd, Nufarm Ltd, Tabcorp Holdings Ltd and Note Printing Australia Ltd. He is also a Director on the Advisory Board of the Garvan Research Foundation.
Mr Warburton is a former Board member of the Reserve Bank of Australia, former Chairman of the NSW Olympic Business Roundtable, a past National President of the Australian Institute of Company Directors, and a former Chairman and Chief Executive Officer of Du Pont Australia and New Zealand.
Mr Hendy is Chief Executive Officer of the Australian Chamber of Commerce and Industry (ACCI).
Mr Hendy is also a board director of Standards Australia, the International Chamber of Commerce (Australia), the Australian Institute of International Affairs (President ACT Branch), the Australian Made Campaign Limited and of the National Business Action Fund. He is a governor of the National Institute of Labour Studies, and is Chairman of the Joint Policy Committee of the Confederation of Asia-Pacific Chambers of Commerce and Industry.
Mr Hendy has a strong background in public administration and policy development at Federal and State levels, for both Liberal and Labor Governments. He was Chief of Staff to the Minister for Defence and Chief of Staff to the Ministers for Workplace Relations and Education.
The authors wish to give special acknowledgement to the team within Treasury who acted as the Secretariat for this review. To collect the data, analyse it, prepare the report and then carry out the necessary quality assurance, all in such a very short period of time, required a Herculean effort. Their dedication and long working hours, well beyond normal, deserve our special thanks.
Table 1: Secretariat members
|Bazen, Derek||Graziani, Robert||Lobo, Audrey|
|Cook, Katherine||Johnson, Shane||McMahon, Paul|
|Flanagan, Paul (Secretary)||Kirby, Amanda||Webster, Tony|
The authors give similar acknowledgement and thanks to the many who helped with their submissions. In particular, Deloitte, Ernst & Young, KPMG, PricewaterhouseCoopers and the Institute of Actuaries of Australia voluntarily supplied very valuable input from their local and overseas resources in a remarkably short time frame.
In addition, the Secretariat would like to acknowledge the assistance provided by a range of officers from within the Department of the Treasury and other departments and agencies, and in particular the efforts of the production team in bringing the report to a final presentation standard.
Table 2: Production team
|Cameron, Elizabeth||McCormack, Catherine||Scarano, David|
|Edwards, Judy||McMahon, Lani||Shilling, Jo|
|Garrard, Grazia||Pearce, Penny|
- Australian Bureau of Statistics
- alternative minimum taxable income
- Association of Southeast Asian Nations
- Australian Taxation Office
- average tax rate
- average worker
- average weekly earnings
- average weekly ordinary time earnings for full-time adults
- comprehensive business income tax
- Congressional Budget Office
- capital export neutrality
- controlled foreign company
- capital gains tax
- corporate income tax
- consumer price index
- corporate profit tax
- corporate tax rate
- effective average tax rate
- effective marginal tax rate
- exchange rate mechanism
- European Union
- foreign direct investment
- foreign investment fund
- foreign tax credit
- gross domestic product
- Government Finance Statistics
- gross national income
- goods and services tax
- information and communications technology
- International Monetary Fund
- luxury car tax
- male total average weekly earnings
- marginal tax rate
- net operating loss
- New South Wales
- Organisation for Economic Co-operation and Development
- OECD Model
- OECD Model Tax Convention on Income and on Capital
- pay as you earn
- purchasing power parity
- research and development
- small and medium enterprise
- social security contribution
- Simplified Tax System
- Tax Expenditures Statement
- value added tax
- wine equalisation tax
- withholding tax
- wholesale sales tax
- World Trade Organization