Tax Freedom Day is the day when the nation as a whole has earned enough to pay off its total tax bill for the calendar year. This year’s Tax Freedom Day falls on Tuesday, 12 April, according to The Centre for Independent Studies.
“Australians have had to work for 101 days in 2016 to pay their direct contribution of more than $440 billion to government expenditure across federal, state and local governments,” says CIS Senior Fellow Robert Carling.
“To put this amount into perspective, it is more than households consume in food, clothing, health services, housing, electricity and gas in a year.
“The nation has worked 81 days to pay federal taxes and 20 days to pay state and local government taxes. Looked at by type of tax, personal income tax has taken 41 days to pay, company income tax 15 days, GST 13 days and all other taxes 32 days.
“The long-term trend has been for Tax Freedom Day to be later in the year as the tax burden has increased. Fifty years ago it was before mid-March, but by the mid-70s it was early April and in the 2000s it was as late as 21 April.
“The impact of tax cuts, the global financial crisis and the end of the mining boom saw Tax Freedom Day retreat to 4 April, but since 2011 it has again become gradually later as taxes have risen and revenue has responded to economic growth.
“Hence, Tax Freedom Day in 2016 is one day later than in 2015.
“Projections of tax revenue point to Tax Freedom Day becoming later still in the years ahead.
“Government expenditure is putting upwards pressure on taxation. In fact, if governments were to stop borrowing and finance all their expenditure from revenue, Tax Freedom Day would become as late as it has ever been in the past.
“This is a salutary reminder of the need for all governments to take a serious look at their priorities and rein in expenditure,” Mr Carling says.
Robert Carling is a Senior Fellow at the Centre for Independent Studies