Download FACT SHEET History of Australia’s tax-transfer system

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FACT SHEET
History of Australia’s tax-transfer system
Section 4 of the ‘Architecture of Australia’s tax and transfer system’ paper provides an overview of the
development of Australia’s tax-transfer system since federation and of the shifting balance between
Australian Government and State revenue powers.
Key points
• The development of the Australian tax system can be categorised into two distinct periods. In the first
period, from federation to the mid-1970s, the focus was largely on revenue adequacy to fund increasing
levels of social provision of goods and services. In the second period, since the mid-1970s, there has
been a greater focus on improving the equity, efficiency and simplicity of the tax system.
• Transfers have evolved from basic payments linked to war service and old age (with Age Pension age
well above average life expectancy) to a more extensive system of social support. The principles of early
pension payments set the social support scene for the future: funded from general government
revenue; based on circumstances rather than past earnings; and means-tested to target assistance.
• Since federation the Australian Government has been the predominant revenue raiser and revenue has
been redistributed to the States.
Australian Government and State taxation (1902-03 to 2006-07)
35
Per cent of GDP
Per cent of GDP
35
30
30
25
25
20
State and territory governments
20
15
15
10
10
Australian government
5
5
0
1902-03
1915-16
1928-29
1941-42
1954-55
1967-68
1980-81
1993-94
0
2006-07