Barry Leddicoat

Lowest tax rates are in Japan, Russia and Australia

ACCORDING to research by global accounting network UHY, Australia has one of the lowest personal tax rates for low-income earners in the world compared to other major global economies.

The report looked at 25 countries across UHY's international network, including all members of the G8 and the emerging BRIC economies comparing the basic 'take home pay' of a single, unmarried employee after income taxes and employee social security deductions of USD 25,000, USD 50,000, USD 200,000, USD 250,000, and USD 1,500,000.

When ranked by lowest personal tax rates, Australia ranks 3rd out of 25 countries for taxes on those earning USD 25,000 per year.

Australians earning USD 25,000 had a tax cut of USD 478 from 2011 to 2012, although those on USD 200,000 saw their taxes rise by USD 2,676.

Australians earning USD 25,000 keep USD 23,873 of their income, while those earning USD 200,000 keep USD 132,097 of their income. This is USD 367 and USD 41,903 less than income kept in Japan and Russia - the lowest taxing economies for USD 25,000 and USD 200,000 respectively (excluding UAE).

Michael Garrone, Tax Partner at UHY Haines Norton in Brisbane, Australia and member of UHY, said: "Australia seems to have found the balance between a progressive and competitive tax system. Unlike other major industrial economies, Australia doesn't have a huge debt burden. Low taxes are offered for the lowest earners." 


However, Mr Garrone said while taxes for high earners were a lot lower than many in Europe and the Americas, they were higher than many of our Asian neighbours. 

"The ever present "brain drain" issue will not abate for Australia while such a taxation discrepancy exists.

"There has been a general easing of the tax rates of low and middle income earners over the past decade, beginning with the introduction of the GST in 2000, and the continued commitment to compulsory superannuation.

"And with the onset of the global financial crisis, Australia was not forced to raise personal taxes.  This is due to our strong economy, with low debt, and led by a healthy resource sector."

The BRIC countries - Brazil, Russia, India, China - all have some of the lowest levels of personal tax and social security contributions. The average taxpayer in a BRIC country will keep 84% their income at USD 25,000 and 75% at USD 200,000. This compares to just 80% and 62% for the same average taxpayers in G7 countries.

With tax rises in France, Italy, Germany, and Canada, the G7 could only manage an average tax cut of USD 11 for those earning USD 25,000 from 2011 to 2012, compared to the average USD 259 tax cut in the BRIC emerging economies.

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