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Which taxes cost the most?

Some taxes have higher costs on the australian economy and households

Taxes impose economic costs by affecting the decisions people and businesses make about how they work, save, invest and employ.

Some of Australia’s taxes have larger impacts on these decisions and, in turn, higher economic costs than other taxes.

This affects the Australian economy and Australian households.

Stamp duties on property transactions (very high): Stamp duties, particularly at their current rates, have very high economic costs for Australia. This is because they can discourage households and businesses from buying properties, when a different type of property may better suit their needs (for example, downsizing).

Company income tax (high): Australia’s company tax rate of 30 per cent is high. Company tax reduces the attractiveness of investment in Australia. Lower levels of investment mean that production or output per worker is lower, which results in lower wages for households.

Personal income tax (medium-high): Progressive tax scales can discourage people from earning more. When a person’s wage increases they can pay more tax at a higher rate. Compared to consumption taxes, these taxes tend to have a larger effect on people’s decisions about working as income taxes have higher tax rates.

Broad payroll tax (medium): Businesses think about payroll tax when setting wages and prices charged. This is passed on to households through lower wages and higher prices, impacting a person’s decisions about work.

GST (medium): Broad consumption taxes raise the price of goods and services. These taxes reduce the amount bought with a person’s salary which can impact their decisions about work.

Land tax (low): People need land to live or conduct business. As land can’t be moved this means broad taxes on land do not affect decisions people and businesses make about their use of land.

The time to reform Australia’s tax system is now. So start talking, Australia.