Justice, Opportunity and Shared Wealth for all South Australians

You are here

Cost of Living Pressures? Don't Blame Taxes

A new report released today by the South Australian Council of Social Service has found that taxes were not a significant driver of increased cost of living pressures. 

The SACOSS Cost of Living Update for the September Quarter this year found that:

  • Taxes are a significant household expenditure (direct taxes accounted for approximately 15% of SA household income); but,
  • Australia is not a high taxing country by international standards;
  • South Australia is not a high taxing jurisdiction by Australian standards; and,
  • Over the last decade taxes have not increased significantly in real terms per capita, or as a proportion of the economy.

SACOSS Executive Director Ross Womersley said,
“The fairly obvious conclusion from the data is that while taxes are significant in the household budget, both as a cost and a provider of services, they are not a driver of increasing cost of living pressures
“The data suggests that households who are struggling with cost of living pressures are far more likely being pressed by increases in prices of other necessary goods and services (and utilities in particular), than by any increase in tax.”

The SACOSS report found that Commonwealth taxation is a smaller part of the Australian economy than it was ten years ago, while South Australian state taxes have declined over ten years from 4.7% to 4.2% of Gross State Product.
In real terms, per capita taxation has remained relatively stable with Commonwealth taxes increasing 3.1% and South Australian state taxes increasing just 0.5%s from 2004/05 to 2013/14.

Mr Womersley said,
“This data provides important background to the current tax reform debates. While our report does not look at reform options, the data clearly does not support calls for tax cuts to relieve a tax burden

"If, as Oliver Wendall Holmes Jnr famously said, “Taxes are the price we pay for a civilised society.”, then the price we have been paying has not increased in the last decade, and we are concerned that tax cuts may undermine the public infrastructure and vital services that our community relies on
“In this context, SACOSS believes that the first task of tax reform should be to ensure that there will be sufficient revenue to fund necessary public infrastructure and vital community services into the future, and to ensure that such revenue is collected fairly where those who can afford to contribute more tax pay more than those who are struggling.”
Beyond taxes, the SACOSS Cost of Living Update noted that the September Quarter saw some relief in electricity prices and cost of living pressures generally, with social security increases covering average cost of living increases.
The Cost of Living Update can be downloaded here  

Published Date: 
Monday, 7 December 2015