The Commonwealth Treasury


OECD REPORT - TAXING WAGES

Close Window

OECD REPORT "TAXING WAGES"

It is misleading to make historical comparisons of the tax burden on Australian workers from the tables contained in the OECD report “Taxing Wages” which was released today. This is because of changes in the way the tables have been compiled. The OECD report explicitly acknowledges the change in reporting practices with respect to Australia.

The OECD publication reports on the tax burdens on illustrative workers in OECD countries. The tax burden covers income tax and employer and employee social security contributions.

In the case of Australia, the OECD changed its coverage of the employer component to include State payroll tax from 2002. This makes comparisons of the total tax burden of pre 2002 and post 2002 misleading. This is acknowledged at pages 30 and 31 of the OECD report.

The Treasury asked the OECD in 2004 to adjust the historical data to include payroll tax in tables prior to 2002 to allow meaningful historical comparisons. The OECD adjusted the tables in its 2004 press release, but did not adjust the historical tables in the body of the report in 2004 and has not done so for 2005.

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.

Ken Henry

Secretary to the Treasury