PM, Treasurer slate 'errors' in OECD report
David Uren, Economics correspondent
March 11, 2005/the AUSTRALIAN
JOHN Howard and Peter Costello have attacked one of the world's most reputable economic think-tanks over a report that revealed Australians faced a rising tax burden over the past eight years, at a time when most advanced nations had lowered taxes.
The Prime Minister said yesterday that the OECD report was wrong. "The OECD report contains some very serious errors," he told parliament.
However, Labor treasury spokesman Wayne Swan said the flaw, which had been found by the Treasurer, did not relate to the tax burden on individuals, which had increased in line with the OECD findings.
"The OECD's report shows in black and white the punishing disincentives faced by families," Mr Swan said.
The OECD surveyed eight typical taxpayer types in 30 countries and measured the burden of taxation, both before and after the payment of benefits. It also looked at the cost of hiring workers.
The report found that there was a global trend towards the reduction of tax for all family types but that in Australia and Iceland tax burdens had increased.
Mr Costello said the OECD report was wrong because it had only included state payroll tax from 2002 and, as a result, comparisons going back to 1996 were misleading.
Treasury secretary Ken Henry released a press statement yesterday saying the OECD had been asked to amend this a year ago, but had failed to do so.
"I have now written to the secretary-general of the OECD asking him to ensure that comparable data for Australia are used in future editions of this report," Mr Henry said.
However, Mr Swan pointed out that the payroll tax issue was relevant only to comparisons of the cost of employing people, and had no bearing upon the average burden of income tax.
"Using the tables (which exclude the impact of the payroll tax changes) it is clear the tax burden has still increased for a number of families," he said.
Mr Swan also refuted Mr Costello's claim that the OECD report did not include the last budget's tax cuts, pointing out that the latest changes were included.
A spokesman for Mr Costello said there were further problems with the OECD figures, which had not included the Medicare levy before 2000.
The spokesman said the replacement of the sole parent rebate with the family tax benefit Part B after 1999 also made the OECD tables misleading.
Mr Costello said the OECD figures showed Australia imposed the eighth-lowest tax burden out of the 30 countries in the survey.
Three of those with lower tax burdens were countries with which Australia would not normally compare itself - Mexico, Turkey and South Korea.
* The charts in yesterday's story were based on OECD tables, which included the addition of payroll tax from 2002 and were misleading as a result. The Australian stands by the story that income tax rates have increased in Australia while they have fallen in other comparable countries.
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Interesting how this government accepts & rejects aspects of different OECD reports by what suits the Liberals' own agenda.
When there are pro-business/anti-workers' rights suggestions, then that's just fine! This latest report, however, is totally unacceptable. The OECD got it wrong!
