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Fact sheet

Fact Check: Is Australia's tax to GDP ratio lower now than it was throughout the Howard years?

Taxation Gross Domestic Product

In a recent book, Fair Share: Competing Claims and Australia's Economic Future, Mr Keating, a former top bureaucrat, and co-author Stephen Bell argue the ratio of tax to GDP, should be lifted by 1 percentage point per decade over the next 30 years to avoid a budget blowout linked to the ageing population. On radio Mr Keating argued Australia's tax to GDP ratio was lower now than it was throughout the Howard years. RMIT ABC Fact Check examined the data and found Mr Keating's claim checks out. At no stage throughout the Howard years was the tax to GDP ratio lower than the current 21.6 per cent. However, it is important to note that the comparison is somewhat clouded by the July 1, 2000 introduction of the GST, a federal tax which replaced several state-based taxes. On Treasury's current forecasts, the tax to GDP ratio is predicted to rise in coming years to levels well above the Howard years. However, Fact Check does not consider these forecasts, which will almost certainly be amended due to new policy decisions and changing economic conditions, to undermine Mr Keating's claim. The extent to which tax cuts are in Australia's best interests is a different question, and not the subject of this fact check.
Verdict: Checks Out

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