Ahead of the 2018 state election, Victorian Shadow Treasurer Michael O'Brien claimed Victoria was the highest taxing state in Australia. Mr O'Brien is correct, but there's more to it. When state taxes are expressed as a share of the state's economy, Victoria is indeed the highest taxing state, with taxes equivalent to 5.3 per cent of gross state product (GSP) in 2017-18, compared to 5.1 per cent for NSW. In the previous financial year (2016-17), Victoria overtook NSW for the first time since 2011-12, with a tax take of 5.5 per cent of GSP, compared to 5.3 per cent for NSW. However, 2016-17 was unusual, with state tax collections boosted by a one-off "prepayment" of $783 million worth port licence fees preceding the long-term lease of the Port of Melbourne. For the sake of analysis, if this one-off tax jump is removed, Victoria's tax-to-GSP ratio falls to about 5.3 per cent in 2016-17, which is equal to NSW for that year. Other important qualifications are also required, including that Victoria does not benefit from significant mining royalties, like some states. Including royalties in a state-by-state comparison places both Western Australia and NSW ahead of Victoria. Also, while Mr O'Brien has referred to the ratio of tax to gross state product as his preferred measure of the tax burden, an alternative measure ' tax per capita ' shows NSW to be a more heavily taxed state than Victoria.
Verdict: Yes, but more to it