Australian Taxpayers to Pay a Record High Tax Burden Without Changes to the Tax System, Parliamentary Budget Office Warns

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A new report released by the Parliamentary Budget Office revealed that Australia’s tax burden would hit record highs in mid-2024 without significant changes to government policy.

The office forecasts a 76 per cent increase in total personal income tax to more than $503 billion by 2032–2033. It is anticipated that company tax receipts will increase by 35 per cent to $175 billion during the same period.

Australian Parliamentary Budget Office Warns

According to the report, bracket creep could discourage low-wage earners from working while enticing those in higher tax brackets to engage in tax structuring and planning.

“There is an important trade-off between fiscal consolidation, aided by bracket creep, and minimising the risks associated with relying on a single source of revenue,” it found.

“For example, the aging population is expected to result in a decline in net taxpayers as a share of the total population. Many retirees pay little to no personal income tax because they have lower incomes and access to age-related tax concessions.”

According to Treasurer Jim Chalmers, the report showed the economic difficulties faced.

“We’ve been clear about the structural pressures weighing on the budget, including the five big growing areas of spending – health, the NDIS, aged care, defence, and the cost of servicing the former government’s debt,” he said.

While according to Cherelle Murphy, chief economist at EY, the data showed that the federal government’s reliance on the taxes paid by common workers would increase, which would be detrimental to the economy’s general health.

“When trying to encourage the largest proportion of the population to participate in the workforce as possible, taxing them more seems like a strange way to do it,” she said.

The PBO’s warning highlights the urgent need for a fair, sustainable tax system that ensures everyone makes their fair share of contributions.

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