Australia isn't a high taxing nation, it just taxes the wrong things

The latest OECD Taxing Wages report reveals that Australian workers are taxed less than other workers across advanced economies, and that calls to further cut income tax will only deliver poorer public services.

One of the biggest myths perpetrated by conservatives is that Australia is a high-taxing nation, and that Australian workers are taxed more than other nations.

Each year, the OECD releases research on the taxing of wages across the advanced economies in the world. The 2026 report, released late last week, contains a plethora of information and data and reveals, yet again, that Australian workers are taxed less than most.

Perhaps the biggest reason conservatives like to pretend that Australia is a high-taxing nation is because unlike all nations in the OECD except New Zealand, Ireland and Denmark, Australia does not levy “social security contributions” (SSC). The SSCs are (to quote the OECD) “compulsory payments to general government that confer an entitlement to receive a future social benefit”.

SSCs are levied like income tax, but whereas income tax just goes into consolidated revenue and is used to fund anything and everything, SSCs are usually earmarked to finance social benefits such as unemployment insurance benefits, accident, injury and sickness benefits, old-age, disability and survivors’ pensions or provision of hospital or medical services.

The key aspect is that they are levied like income tax and unlike superannuation contributions, you don’t get them back. If, for example, you are not unemployed or sick, you don’t get a refund.

The OECD counts both income tax and SSC as taxes on wages. And when we include both, Australian workers are taxed less than most nations in the OECD:

The OECD also looks at how much tax workers pay across different levels of income.

Because it is tough to compare actual dollar incomes across different nations, the OECD benchmarks all incomes relative to average full-time earnings. In this way, we can compare how much tax you pay in Australia if (for example) you earn half the average full-time earnings compared to what you would pay in every other country if you also earned half the average there as well.

This shows that Australian workers pay less than the average level of tax across the OECD until you earn nearly 250% the annual average full-time earnings.

Australian workers pay less tax than in the USA until they earn the equivalent of $200,000, and they pay less compared to the overall OECD until they earn $240,000:

It is no accident that despite the OECD reporting every year that Australian workers are taxed less than workers in other advanced economies, conservatives continue to pretend Australia is a high tax country. We are not.

The reality is that, given Australia is already a low taxing nation, such cuts would only lead to fewer public services and more that are underfunded and delivering worse outcomes.

The level of income tax paid by Australians is not high; the problem is that the government raises too little in other taxes. This means we are somewhat more reliant on income tax than other nations.

The solution is obvious – better tax those other areas, especially the level of gas exported.

A 25% gas export tax would not only deliver Australians a fair return on their resources, but it would also reduce the share of funding of government services that falls on workers through income tax.
It would deliver better funded public services without needing to hurt workers through higher income taxes.