David Uren has a piece in the Australian today talking about the latest OECD taxation statistics (2011 – so somewhat out of date).
Looks like we’re getting softened up for (a) increases in taxation or (b) delays in tax cuts. This would be bad policy. The Abbott government needs to cut spending and then cut taxes and balance the budget at a lower level of GDP.
What really annoys, however, is this:
Australian personal income taxes are 10.2 per cent of GDP, which is a smaller share than any other OECD member except South Korea. The average (including compulsory social security contributions common throughout Europe) is 18.1 per cent of GDP.
This isn’t comparing like with like.
It is true that Australia does not have social security payments like most European countries do – but we do have compulsory superannuation. This performs much the same function as does social security – except in Australia it has been privatised and isn’t a ponzi scheme. To that extent when making comparisons with other OECD economies we should either add superannuation payments in, or take social security payments out to ensure we’re comparing like with like.