5506.0 - Taxation Revenue, Australia, 2006-07 Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 15/04/2008   
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APPENDIX ADJUSTED MEASURES OF GOVERNMENT REVENUE

 
ADJUSTED MEASURES OF GOVERNMENT REVENUE
 
The taxation revenue statistics presented in this release are in accordance with the Australian System of Government Finance Statistics (GFS). This system is outlined in the Australian System of Government Finance Statistics: Concepts, Sources and Methods (cat. no. 5514.0) which is consistent with the International Monetary Fund's Government Finance Statistics Manual 2001 (IMF GFSM2001).
 
The GFS framework reflects taxation revenue collected by each level of government. The purpose of this appendix is to consider an alternative presentation of revenue which takes into account the level of government at which revenue is used rather than simply collected. The analysis considers the flows, by way of current grants, that occur between the levels of government in Australia, and the impact that this has on revenue at each of these levels. Also considered is the effect of direct and indirect transfers to households on total revenue. To aid in the understanding of these flows, the following analytical measures of revenue have been derived. Users should note that these measures are not themselves part of the GFS framework.
 
 
Adjusted taxation revenue
 
Adjusted taxation revenue is equal to GFS taxation revenue collected by each level of government, plus current grants received from higher levels of government, less current grants paid to lower levels of government. This measure is designed to give a clearer indication of the levels of government at which taxation revenue is actually used or spent. The source for a significant amount of the current grants distributed between levels of government is taxation revenue, such as the GST. However, some of the revenue distributed may have come from a source other than taxation. Further, it should be noted that some of the current grants transferred from Commonwealth Government to the state and local governments are Specific Purpose Payments (SPPs). Unlike the GST-related grants, these payments are 'tied' to specific policy areas or programs as agreed between the two levels of government. Similar arrangements exist between state and local government. SPPs for current purposes are included with other current grants in deriving adjusted taxation revenue. The ABS does not have the data required to separate out SPPs from other grants.
 
 
Adjusted total revenue
 
Adjusted total revenue is equal to adjusted taxation revenue plus all other non-taxation sources of revenue. Non-taxation revenue includes revenue from sales of goods and services, property income (interest, dividends, income tax equivalents, land rents and royalties), fines, capital transfers, and current transfers other than grants. Current grants are excluded from non-taxation revenue because these have already been taken into account in deriving adjusted taxation revenue.
 
 
Adjusted total revenue less transfers to households
 
An important role of government is the redistribution of income, by way of direct and indirect 'benefits', to individual households. These transfers can be deducted from adjusted total revenue to derive adjusted total revenue less transfers to households. Direct benefits are regular cash payments made to households by government without any requirement to provide goods and services in return (e.g. welfare payments). Indirect benefits are non-cash benefits and services provided by government to individual households (e.g. concessions for transport and utilities, medical and pharmaceutical benefits and natural disaster relief).
 
The three derived measures explained above are illustrated in the following diagram:

Diagram: Adjusted total revenue less transfers to households
 
An analysis along similar lines was first published in Australian Economic Indicators, March 2006 (cat.no.1350.0), in a feature article entitled "Recent Taxation Revenue Trends in Australia". This article included information on the introduction of The New Tax System on 1 July 2000.
 
 
Adjusted taxation revenue
 
Table 1 shows the derivation of adjusted taxation revenue, for all three levels of government in Australia.
 

Table 1. ADJUSTED TAXATION REVENUE, by level of government, and as % of GDP

2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
$m
$m
$m
$m
$m
$m

Commonwealth

1. Taxation revenue collected(a)
177 838
194 827
209 560
229 131
245 223
261 988
As % of GDP
24.2
24.9
24.9
25.5
25.3
25.0
As % of total tax revenue
81.7
81.8
81.5
82.3
82.4
81.9
2. Current grants to state government(b)
49 284
51 172
53 801
57 560
61 394
63 874
3. Current grants to local government
490
274
351
305
81
56
4. Current grants to multi-jurisdictional sector(c)
4 327
4 381
4 788
4 839
5 556
5 589
5. Adjusted taxation revenue =1-2-3-4(d)
123 738
139 000
150 620
166 427
178 192
192 469
As % of GDP
16.8
17.8
17.9
18.5
18.4
18.4
As % of total tax revenue
56.9
58.4
58.5
59.7
59.8
60.2

State

1. Taxation revenue collected(a)
33 341
36 418
40 394
41 649
44 240
48 911
As % of GDP
4.5
4.7
4.8
4.6
4.6
4.7
As % of total tax revenue
15.3
15.3
15.7
15.0
14.9
15.3
2. Current grants from Commonwealth government
49 284
51 172
53 801
57 560
61 394
63 874
3. Current grants to local government
1 789
1 817
1 843
1 889
2 003
2 174
4. Current grants to multi-jurisdictional sector(c)
203
264
254
391
439
449
5. Adjusted taxation revenue =1+2-3-4(d)
80 633
85 509
92 098
96 928
103 192
110 161
As % of GDP
11.0
10.9
10.9
10.8
10.7
10.5
As % of total tax revenue
37.1
35.9
35.8
34.8
34.7
34.4

Local

1. Taxation revenue collected(a)
6 757
7 224
7 671
8 183
8 710
9 388
As % of GDP
0.9
0.9
0.9
0.9
0.9
0.9
As % of total tax revenue
3.1
3.0
3.0
2.9
2.9
2.9
2. Current grants from Commonwealth government
490
274
351
305
81
56
3. Current grants from state government
1 789
1 817
1 843
1 889
2 003
2 174
4. Adjusted taxation revenue = 1+2+3(d)
9 036
9 315
9 865
10 376
10 795
11 619
As % of GDP
1.2
1.2
1.2
1.2
1.1
1.1
As % of total tax revenue
4.2
3.9
3.8
3.7
3.6
3.6

Gross Domestic Product(e)
735 714
781 675
841 351
897 642
967 454
1 046 903
Total taxation revenue collected(a)
217 609
238 118
257 253
278 562
297 737
319 776
As % of GDP
29.6
30.5
30.6
31.0
30.8
30.5

(a) According to GFSM2001. Part of the Commonwealth Government grants paid to State Goverments are onpassed to Local Governments. The multi-jurisdictional sector contains units where jurisdiction is shared between two or more governments, or where classification of a unit to a jurisdiction is otherwise unclear. The main type of units currently falling into this category are the public universities. The sum of taxation revenue for all levels of government does not equal the sum of adjusted taxation revenue for
(b) Part of the Commonwealth Government grants paid to State Goverments are onpassed to Local Governments.
(c) The multi-jurisdictional sector contains units where jurisdiction is shared between two or more governments, or where classification of a unit to a jurisdiction is otherwise unclear. The main type of units currently falling into this category are the public universities.
(d) The sum of taxation revenue for all levels of government does not equal the sum of adjusted taxation revenue for all levels of government owing to grants paid to the multi-jurisdictional sector.
(e) As published in Australian National Accounts, December Quarter 2007 (cat no 5206.0).

 
Taking into account taxation revenue distributed by the Commonwealth Government to both state and local Government by way of current grants, the level of adjusted taxation revenue at the Commonwealth Government's disposal in 2006-07 was $192,469 million. This represents an 8.0% increase from the previous year, compared with a 6.8% increase in directly collected taxation revenue. Adjusted taxation revenue for the Commonwealth Government was 60.2% of total taxation revenue in Australia in 2006-07, compared with 56.9% in 2001-02.
 
State government's adjusted taxation revenue in 2006-07 was $110,161 million. This represents a 6.8% increase from the previous year, compared with a 10.6% increase in directly collected taxation revenue. Adjusted taxation revenue at the state level of government was 34.4% of total taxation revenue in 2006-07, compared with 37.1% in 2001-02.
 
The two graphs below show taxation revenue and adjusted taxation revenue as a proportion of GDP for each level of government over the period 2001-02 to 2006-07. Graph 1 shows that taxation revenue collected by the Commonwealth Government represented 25.0% of GDP in 2006-07, up from 24.2% in 2001-02. For state governments, taxation as a percentage of GDP increased from 4.5% to 4.7% over the same period. After taking into account current grants (adjusted taxation revenue in Graph 2) these proportions change to 16.8% in 2001-02 and 18.4% in 2006-07 for the Commonwealth Government and 11.0% in 2001-02 and 10.5% in 2006-07 for the state governments.

Graph1. Taxation Revenue, Australia, As a Percentage of GDP
Graph 1: Taxation Revenue, Australia, As a percentage of GDP


Graph 2. Adjusted Taxation Revenue, As a percentage of GDP
Graph 2: Adjusted Taxation Revenue, As a percentage of GDP

 
 
Adjusted total revenue, and adjusted total revenue less transfers to households
 
Table 2 below shows adjusted total revenue, and adjusted total revenue less transfers to households for all three levels of government.
 

Table 2. ADJUSTED TOTAL REVENUE, less transfers to households

2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
$m
$m
$m
$m
$m
$m

Commonwealth

1. Adjusted taxation revenue(a)
123 738
139 000
150 620
166 427
178 192
192 469
2. Non-taxation revenue(b)
12 318
11 794
12 350
12 754
15 369
15 842
3. Adjusted total revenue =1+2
136 056
150 794
162 970
179 181
193 562
208 311
As % of GDP
18.5
19.3
19.4
20.0
20.0
19.9
4. Direct benefits to households(c)
61 662
63 607
71 897
73 989
76 997
81 908
5. Indirect benefits to households(d)
17 060
17 765
19 590
22 164
22 789
24 521
6. Adjusted total revenue, less transfers to households =3-4-5
57 335
69 422
71 483
83 029
93 776
101 882
As % of GDP
7.8
8.9
8.5
9.2
9.7
9.7

State

1. Adjusted taxation revenue(a)
80 633
85 509
92 098
96 928
103 192
110 161
2. Non-taxation revenue, excluding current grants from Commonwealth government(b)
24 099
26 234
29 836
32 714
36 943
39 984
3. Adjusted total revenue = 1+2
104 732
111 743
121 934
129 642
140 135
150 145
As % of GDP
14.2
14.3
14.5
14.4
14.5
14.3
4. Direct benefits to households(c)
787
708
759
1 084
1 000
1 115
5. Indirect benefits to households(d)
1 963
2 057
2 025
1 948
1 921
1 915
6. Adjusted total revenue, less transfers to households = 3-4-5
101 982
108 978
119 150
126 610
137 214
147 114
As % of GDP
13.9
13.9
14.2
14.1
14.2
14.1

Local

1. Adjusted taxation revenue(a)
9 036
9 315
9 865
10 376
10 795
11 619
2. Non-taxation revenue, excluding current grants from Commonwealth and state governments(b)
9 021
9 536
10 057
10 961
12 232
13 651
3. Adjusted total revenue = 1+2
18 057
18 851
19 922
21 337
23 027
25 269
As % of GDP
2.5
2.4
2.4
2.4
2.4
2.4
4. Direct and indirect benefits to households(e)
. .
. .
. .
. .
. .
. .
5. Adjusted total revenue, less transfers to households = 3-4
18 057
18 851
19 922
21 337
23 027
25 269
As % of GDP
2.5
2.4
2.4
2.4
2.4
2.4

. . not applicable
(a) Derived in Table 1.
(b) Non-taxation revenue includes revenue from sales of goods and services, interest income, other property income (such as dividends, income tax equivalents, land rents and royalties), fines, capital revenue, and all current revenue other than grants.
(c) Direct benefits to households are monetary transfers.
(d) Indirect benefits to households are transfers 'in-kind' via goods and services.
(e) Local government does not make transfers of this kind to households.

 
Adjusted total revenue for the Commonwealth Government in 2006-07 was $208,311 million, up 7.6% from the previous year, compared with an increase of 8.0% in adjusted taxation revenue. For the state governments, adjusted total revenue in 2006-07 was $150,145 million, an increase of 7.1%, compared with an increase of 6.8% in adjusted taxation revenue.
 
Graph 3 shows the adjusted total revenue for each level of government over the period 2001-02 to 2006-07. Graph 4 shows these amounts as a percentage of GDP.

Graph 3. Adjusted Total Revenue
Graph 3: Adjusted Total Revenue


Graph 4. Adjusted Total Revenue, As a percentage of GDP
Graph 4: Adjusted Total Revenue, As a percentage of GDP

 
When direct and indirect transfers to households are taken into account, Commonwealth Government's revenue falls to $101,882 million in 2006-07 compared to a total of $147,114 million for state governments. This is largely because of the income redistribution role performed by the Commonwealth Government through the welfare payments. In 2006-07, 51.1% of the Commonwealth Government's adjusted total revenue was transferred to households as either direct or indirect benefits. This figure was 57.9% in 2001-02. In 2006-07, the Commonwealth Government's adjusted total revenue less transfers to households grew at a faster rate (8.6%) than adjusted total revenue (7.6%).

Graph 5. Adjusted Total Revenue Less Transfers to Households
Graph 5: Adjusted Total Revenue less transfers to households

 
After adjusting for transfers to households and comparing to GDP, there has been a slight upwards trend in total revenue available to Commonwealth Government and state governments since 2001-02. Commonwealth adjusted total revenue less transfers to households was equal to 7.8% of GDP in 2001-02 and this increased to 9.7% in 2006-07. The corresponding state measure had risen to 14.1% of GDP in 2006-07 compared to 13.9% in 2001-02.

Graph 6. Adjusted Total Revenue Less Transfers to Households, As a percentage of GDP
Graph 6: Adjusted Total Revenue less transfers to households, As a percentage of GDP