Australia has low sales and consumption taxes

Australian Sales & consumption taxes among the world's lowest.

February 19th 2013


Despite challenging times in the retail environment, Australia remains a comparatively consumer friendly country when it comes to taxing goods and services, recording the 8th lowest level of consumption and sales taxes according to a new 22 nation comparison study by UHY, the international accounting and consultancy network. (see attached table).

The study calculated the percentage of the total price of a representative basket of goods and services that was made up of taxes and duties in 22 countries* across UHY's international network, including all members of the G8 and developing BRIC economies.

The Australian government takes 12% of the total price of the good and services tabled in the study that included energy bills, bread, petrol, cigarettes, wine, cinema tickets, chocolate and iPads. This contrasts with Brazil and India at the other end of the scale, who collect 28.71% and 37.97% in taxes on the same goods and services respectively.

While Australia was a relatively lower consumer and sales taxing nation - on average out performing the G8, BRIC and Europe - the data revealed it was notably higher taxing that its key Asian Pacific trading partners of China, Japan and Malaysia.

On average, European governments are responsible for 15.5% of the price of UHY's basket of goods and services. This compares to an average of 13.8% for all countries, 12.3% in G8 countries and 8.3% in the Asia-Pacific countries.

UHY Haines Norton's Australian Tax Group Chairman, Michael Garrone, said Australia's low level of indirect consumption and sales taxes gives a boost to the economy by providing businesses some flexibility on price and consumers consistency.

"Our GST of 10% mens the indirect tax burden is relatively simple and consistent for consumers and business alike compared to other nations' tax systems," said Mr Garrone.

"Many European nations for example, have attempted to address budget deficits by raising sales taxes but this has backfired, discouraging a consumer led economic recovery.

"Moreover, in a global market dealing with the rise of a borderless e-commerce world, low levels of indirect taxes are central to the survival of many businesses." Mr Garrone said.

To view study data Download PDF