The University of Sydney-    Classic Texts in Australian and International Taxation Law

I. Historical Perspective

2.2 In 1973–74 the various governments in Australia between them raised over $13,750 million in taxes. The figure had been gradually, though not continuously, climbing to this total ever since Federation, with the increase in population, in money income per head, and in the range of government activities. Some salient statistics, revealing among other things the lasting impact two major wars have had on the level and pattern of taxes and on the Australian Government's share of them, are given in Table 2.A.

TABLE 2.A: TAX REVENUE: SELECTED YEARS SINCE 1901–02 ($ million)

                           

	1901–02	1909–10	1919–20	1928–29	1938–39	1949–50	1959–60	1966–67	1973–74
Income tax—
Australian Government			21	20	24	559	1,339	2,724	7,523
State and local governments	1	3	12	32	60
Total	1	3	33	52	84	559	1,339	2,724	7,523
Other domestic taxes—
Australian Government	3	4	22	34	66	300	1,011	1,493	2,810
State and local governments	9	12	25	64	72	146	523	967	2,830
Total	12	16	47	98	138	446	1,534	2,460	5,640
Tariff revenue	15	19	23	59	62	155	168	275	605
Total taxes	28	38	103	209	284	1,160	3,041	5,459	13,768
Tax per adult ($)	13	15	33	54	62	216	479	758	1,655
									(a)
note note

2.3. These figures can be better understood, and be more readily acceptable to those who pay taxes, if they are related to the growth of the economy as a whole, as reflected in estimates of gross national product, and to a broad classification of the


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multifarious uses made of tax revenue. Statistics for the more distant past are not, however, readily available. In rough terms, the total taxes as a proportion of gross national product have risen from 6 per cent in the initial years of Federation, to 9 per cent in the early 1920s, 16 per cent by the end of the 1930s, and 24 per cent at the height of World War II. More trustworthy estimates are available for less distant years and these, with some figures for the main uses of taxation, have been assembled in Table 2.B. They show that while taxes remained a fairly stable proportion of gross national product during the 1950s—at around 22–23 per cent, the proportion was only a little lower than the wartime peak—they have recently been gaining ground and now correspond to over 27.5 per cent of gross national product. Government spending presents a similar picture.

TABLE 2.B: TAXATION AND ITS USES: ALL LEVELS OF GOVERNMENT SELECTED YEARS SINCE 1949–50

                           

	1949–50	1954–55	1959–60	1964–65	1969–70	1973–74
	$ million
Total taxation	1,160	2,184	3,041	4,622	7,722	13,768
Uses—
Current goods and services	426	941	1,323	2,066	3,677	6,869
Transfer payments(a)	520	811	1,230	1,872	2,900	4,978
Contribution to government investment(b)	214	432	488	684	1,145	1,921
	Percentage
Percentage of gross national product(c)—
Taxation	22.8	22.8	22.2	23.6	25.9	27.7
Government expenditure on goods and services (current and capital)	16.6	18.9	18.5	20.0	21.6	21.5
Total government expenditure (including transfer payments)	26.8	27.4	27.5	29.6	31.4	31.5
Contribution of taxation to government investment as per cent of government investment (d)	51.0	49.6	40.2	36.9	41.6	50.0
note note

2.4. One of the key issues examined in this report concerns the tax mix. Recent trends for the principal taxes levied by the Australian Government are summarised in Table 2.C. Undoubtedly the most striking feature of this table is the mounting importance of personal income tax. In 1973–74 just over half of the Australian Government's tax revenue derived from personal income tax and the figure is expected to be close to 55 per cent in 1974–75, whereas scarcely a dozen years ago personal income tax accounted for little more than a third of revenue.

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TABLE 2.C: AUSTRALIAN GOVERNMENT TAXES: SELECTED YEARS SINCE 1949–50

                                                     

							(a)
	1949–50	1954–55	1959–60	1964–65	1969–70	1973–74	1974–75
		$ million
Income tax—
Persons	392	720	884	1,569	2,855	5,490	7,966
Companies	167	343	455	722	1,187	2,033	2,566
	559	1,063	1,339	2,291	4,042	7,523	10,532
Estate and gift duty	14	22	32	49	80	76	77
Customs duties	155	202	168	268	414	605	770
Excise duties	132	286	504	631	939	1,555	1,765
Sales tax	85	201	328	363	569	969	1,105
Payroll tax(b)	45	83	110	150	230	8	12
Other(c)	24	17	37	67	106	202	258
Total	1,014	1,874	2,518	3,819	6,380	10,938	14,519
	Percentage of total taxes
Income tax—
Persons	38.7	38.4	35.1	41.1	44.7	50.2	54.9
Companies	16.5	18.3	18.1	18.9	18.6	18.6	17.7
	55.1	56.7	53.2	60.0	63.4	68.8	72.5
Estate and gift duty	1.4	1.2	1.3	1.3	1.3	0.7	0.5
Customs duties	15.3	10.8	6.7	7.0	6.5	5.5	5.3
Excise duties	13.0	15.3	20.0	16.5	14.7	14.2	12.2
Sales tax	8.4	10.7	13.0	9.5	8.9	8.9	7.6
Payroll tax(b)	4.4	4.4	4.4	3.9	3.6	0.1	0.1
Other(c)	2.4	0.9	1.5	1.8	1.7	1.8	1.8
Total	100.0	100.0	100.0	100.0	100.0	100.0	100.0
note note

2.5. The complexity of the Australian tax system is one of the matters to which the Committee is expected to address itself. The simple facts of the numbers of taxpayers involved with income tax are given in Table 2.D: particularly significant is the very rapid growth in the proportion of adult females subject to income tax and in the numbers of partnerships and private companies. Some other facts are worth noting too. More than 80 amending Acts have altered or been added to the principal Income Tax Assessment Act since it first came into operation in 1936; as a result the 1936–1973 Act now extends to 526 pages, six times its original length. Practitioners' textbooks explaining the operation of the Act are today printed in four or more volumes instead of one. In 1973–74 a total of 54,401 objections were lodged against income tax assessments, 350 cases transmitted to Boards of Review, and 31 taxation appeals (mostly income tax cases) decided by the High Court or State Supreme Courts. The several Acts covering Federal estate and gift duty occupy nearly 60 pages, while the sales tax legislation is covered in 220 pages. Significant changes have been made in sales tax exemptions since 1936, with the result that the publication containing relevant sales tax rulings now runs to over 700 pages. The handbook,


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Commonwealth Sales Tax, has been expanded in length to give rulings and explanations of the application of the sales tax laws to new manufacturing processes. While all this may be necessary, it deserves continuous review.

TABLE 2.D: NUMBERS OF TAXPAYERS, RESIDENT AND NON-RESIDENT, ASSESSED FOR INCOME TAX: SELECTED INCOME YEARS SINCE 1954–55

                               

	1954–55	1964–65	1971–72
Individuals—
Male (million)	2.7	3.2	3.6
per cent of adult males (a)	90	93	91
Female (million)	1.0	1.5	2.1
per cent of adult females (a)	34	43	51
Total (million)	3.7	4.6	5.7
per cent of adults (a)	63	67	71
	’000	’000	’000
Partnerships	155	301	413
Trusts	65	108	113
Companies: (b)—
Private (c)	23	55	87
Public	6	11	10
Total (d)	31	71	105
note note