Treasury Secretary highlights role of indirect taxes

The Treasury Secretary, Dr Martin Parkinson, has delivered a speech about Australia’s current fiscal position and what might be done to address it. He noted that Australia has relatively high reliance on direct taxes as a proportion of revenue raised when compared to other OECD countries.

Dr Parkinson says research consistently shows that “reduced reliance on income taxes and increased reliance on other, more efficient sources of revenue, including indirect taxes, can support higher growth and higher living standards by increasing workforce participation and lifting productivity”. However, without conscious change, “Australia’s tax mix will move in the opposite direction as personal income tax increases through fiscal drag”.