Publications
Business Bearing the Burden 2009
OCCASIONAL PAPER
The IPA State Business Tax Calculator calculates the level of state government taxes on business in each of the six Australian states.
The IPA analysis reveals:
- South Australia has the highest taxes on business, while Western Australia has the lowest for the second year in a row.
- The level of tax imposed on a business differs significantly according to industry and business size.
- Transport and construction businesses are the most heavily taxed by state governments, while services firms are the most lightly taxed (e.g. a transport company in NSW pays almost twice as much tax as does an IT consultancy firm based in Queensland).
- There is also a wide discrepancy between the level of specific state taxes on business (e.g. a business in South Australia pays at least six times more land tax than an equivalent business in Western Australia).
- Small businesses are taxed proportionately more heavily by state governments than medium or large businesses.
- The key policy implications of the IPA findings are:
- Transaction-based taxes and charges at the state level disproportionately affect small business, a main driver of economic activity and employment in Australia.
- The structure of state government business taxes militate against federal government policies (e.g. infrastructure-related companies are more heavily taxed by states than service firms).
- The reliance of the states on inefficient taxes - including on transactions undertaken by companies - inhibits market processes and economic growth, and does not take into account the financial circumstances of the taxed corporation.
- State business taxes are widely held to impede efficiency, constrain business growth and reduce export opportunities.
- If state governments use the findings from this study to cut tax burdens, Australia stands to improve upon its currently subdued recovery and realise its bright economic potential.