Five Taxes We Should Abolish Immediately

Australians are drowning in taxes that range from counter-productive to outright absurd. When it comes to tax cuts, we’ll take whatever we can get – Australians pay too much tax. However, and at the risk of splitting hairs, some taxes are worse than others and should be abolished immediately.

Here are five of the worst offenders.

1. Payroll Tax

All of Australia’s state and territory governments rely on payroll tax to varying degrees. It’s a tax on job creation that supresses wages and discourages businesses from employing people. Once a business’s total payroll passes an arbitrary threshold the government skims a percentage of every additional dollar paid in salaries. The more people a business hires, the more it gets penalised, and many business owners report that payroll tax has discouraged them from expanding. With unemployment and insecure gig work rampant, such a tax is the last thing we need. It’s a blunt, antiquated revenue grab that actively works against wages and employment.

2. Luxury Car Tax

The Luxury Car Tax (LCT) is a relic from a bygone era. Introduced in 2001 to protect local car manufacturers from imports, it was a bad idea at the time and now serves no purpose. Yet it lives on, adding a whopping 33% tax on vehicles above approximately $80,000, a laughably low threshold in today’s market. The tax adds thousands to the price of a new car and discourages safety and emissions improvements. It prices consumers out of newer, lower emissions cars with better safety features and contributes a drop in the bucket to the federal budget. We should kill it off without delay.

3. Passenger Movement Charge

Believe it or not, we even get taxed for leaving the country. The Passenger Movement Charge (PMC) is a departure tax, currently $60 per person on every outbound international trip. No surprises, it’s one of the highest departure taxes in the world. This pathetic cash grab punishes Australians for travelling overseas. Planning a family trip? The government skims an extra few hundred dollars off your tickets, just because it can. It’s obviously not enough that we already get slugged with short-stay accommodation taxes and the world’s most expensive passports. The PMC raises over $1.2 billion a year, significantly more than border control costs. Give us a break - abolish this tax.

4. Medicare Levy Surcharge

The Medicare Levy Surcharge is a sneaky, punitive tax that hits people who exercise the right to make their own health decisions. If you earn above a certain income (around $100k for singles) and don’t buy private health insurance, the government whacks you with up to 1.5% extra tax on your income. This punishes you for sticking with Medicare, which you also pay for, and forces younger and higher income earners into private health cover. It’s outrageous: why should Australians be fined by the government for choosing not to pay expensive premiums to a private company? The tax was introduced in 1997 by the Howard government to boost private health insurance membership. The government’s own data proves it hasn’t worked. We should abolish this tax and let Australians make their own health choices.

5. Congestion & Parking Space Levies

In several cities, state and territory governments impose a hidden tax on car parks. Politicians say it’s to reduce traffic congestion, but we know it’s really their addiction to the revenue. These levies discourage people from visiting city centres that are already struggling in the work-from-home era. Since it was introduced in 2006, Victoria’s congestion levy is up more than 600%. It jacks up the cost of commuting by car, hurting people who live in outer suburbs with poor public transport options. Driving is not a luxury for many Australians, it’s a necessity for shift workers and those who can’t afford to live in the inner-city. If we want vibrant city centres, we should encourage people to visit and not hit them with a tax for the sin of parking their car.

These five taxes are unnecessarily punitive, raise very little in the context of total government revenue and should be abolished immediately.

This is by no means an exhaustive list. Here are two additional dishonourable mentions.

6. Tobacco Excise

As I canvassed in a recent article, Australia’s tobacco excise is an excellent Laffer curve case study. For years, our government has hiked tobacco taxes to some of the highest levels in the world, believing it would drive down smoking. Instead, we’ve hit the tipping point and it’s backfired spectacularly. The black market has exploded, organised crime incidents have become a daily occurrence, and our overzealous politicians and bureaucrats refuse to admit defeat. Tobacco excise is so high that the surge in black market sales has resulted in collapsing tax revenue. It’s time to abolish this tax, it’s the only thing that will give consumers confidence to return to legal retailers.

7. Alcohol Excise

If you enjoy a beer or a glass of wine, prepare to pay through the nose. Thanks to biannual excise hikes, Australia now has the third-highest beer tax in the developed world. Alcohol, like tobacco, is already subjected to consumption tax (10% GST), but the government piles an extra excise on top of that, turning your pint or bottle into a tax layer cake. It’s blatant revenue-raising, it’s punitive, and it’s symbolic of Australia’s nanny-state culture. This tax needs to go.

All these taxes represent the very worst of government overreach. In most instances, they represent a tiny sliver of total government tax revenue, meaning they’re nothing more than a punitive, bureaucratic burden.

When was the last time you heard a government minister propose abolishing a tax, as opposed to implementing a new one? Australia needs a leaner, fairer tax system that doesn’t penalise success, ambition or everyday life. The quickest way to start is by torching the stupid taxes listed above – the sooner, the better.