David Uren from The Australian, as quoted by Mark the Graph:
Last week’s national accounts show company tax payments have fallen from an all-time peak of 6.2 per cent of gross domestic product in 2007 as Peter Costello delivered his last budget, to just 3.8 per cent in the June quarter. This is the lowest share since September 1996, when Costello delivered his first budget. It is less than during the global financial crisis and erodes all the gains in corporate taxation tapped by both governments to finance personal tax cuts, increased family benefits, higher pensions, greater education spending and much more during the past 16 years. No wonder the budget is in deficit.
View some great charts from the National Accounts at Mark the Graph: Tax chartacular.
Colin, are you suggesting that increasing corporate taxes will be good for the economy? If not then what is the purpose of your comment? Corporate taxes would need to increase in excess of 63% to get to 6.2% of GDP. In any event measuring corporate taxes against GDP does not say all that much – it can be a misleading indicator. For example corporate taxes have decline in recent years because corporate profits other than for the large mining companies and large commercial banks have declined substantially which is likely to be a cause for lower stock prices for the vast majority of ASX stocks. in addition productivity in the private sector is not all that healthy and as i understand it, is actually declining , which is another reason for lower tax receipts. in addition the government sector has been growing substantially especially in the last 10 years or more whilst the private sector’s share of GDP is declining. what the Federal government needs to do is to reduce expenditure and set in place policies that increase production by the private sector which is the only way a nation can increase its real wealth.
Regards
Robert, Rising corporate tax payments would indicate the economy is recovering.
Raising corporate tax rates would send us to hell in a handcart.
Deficit spending is indefensible other than when there is a major war or banking collapse/deflationary spiral.
Hmm, it seems corporate taxes bottom out at the end of a Labor governments term.
I agree with Robert. The last thing needed is for the Federal Government to keep on spending money they do not have and will not have. The Governments income will fall substantially so why are they promising to spend money like a man with no legs.
What does it matter? I thought that 90% of tax revenue came from people on wages.
Take a look at Mark the Graph’s chartacular for the actual percentages
This is off topic, but I pick up on a comment by Robert.
I don’t know where all this talk about “poor productivity” comes from. The company I work for (a multinational with 4 factories in Australia) has been recording DOUBLE DIGIT productivity gains for the last 2 years. And in the business roundtable I attend (mostly manufacturing businesses) nearly all attendees are working v hard on productivity improvements (you have to with the bad business environment we have at present) and recording decent gains.
I don’t know who the poor performers are on productivity, but I am not seeing them!
Back on topic – I am hardly surprised about the low corporate tax receipts, it is indicating the true health of the economy. The RBA and Wayne Swan are in dream land – we are in a bad way for businesses. Why else is the ASX 45% off the pre GFC high and the S&P 500 nearly at a new high? At least in the US, despite all the talk, manufacturing businesses are growing well and manufacturing employment has been growing there significantly. I have yet to see any country do well long term without a strong manufacturing sector – WAKE UP RBA, cut interest rates and this will get the dollar down out of the clouds.
Rather leave interest rates where they are and buy dollars to bring the exchange rate down — we have a bad case of “Dutch disease” and are fast developing symptoms of “Swiss disease”: flight to safe havens drives up the currency and destroys export industries.
Interpretation of trends and cyclical movements as presented in your charts is confused by the varying time scales you have used. This can be most relevant if movement in one or more data series is related to or caused by or inverse to the movement in another series. The surge in company profits in the period to around 2005 can be related to the personal spending surge and the related personal credit bubble and the massive damage to personal and corporate balance sheets – both of which had to be corrected.
“Interpretation of trends and cyclical movements as presented in your charts is confused by the varying time scales you have used.”
Not clear what you mean. Can you give a specific example?