States and territories provide a range of essential services to Australians.

1. State revenue from taxes
Taking a look in six slides
June 2015

2. States and territories provide a range
of essential services to Australians
1
The revenue to fund
these services comes from:1
Other
24%
State tax
31%
Goods and
services tax (GST)
23%
Other grants from
Federal Government
22%

3. The GST only applies to some goods
A GST of 10 per cent is collected by businesses on the sale of many
goods and services in Australia. The GST is the single largest source
of Commonwealth funding for state governments.
…with many goods and services
exempt from the GST.
2
Just under half of consumption
is subject to the GST…

4. 3
GST exemptions are not necessarily targeted
at low income households
Lower-income households spend a
greater proportion of their income on
goods and services exempt from GST.
0%
20%
40%
60%
80%
Lowest 20 per cent of
households
Highest 20 per cent of
households
0%
10%
20%
30%
40%
Lowest 20 per cent of
households
Highest 20 per cent of
households
But higher-income households
receive most of the benefits of
these exemptions as they
spend more (in dollars) on
GST-exempt items.2
Spending on GST exempt items as a
share of income 3
GST revenue foregone due to
exempt items 3

5. Payroll tax is a large source of tax revenue
for state governments
Approximately one-third of state tax
revenues or 10 per cent of state revenue
around Australia is collected from payroll
taxes1– however, there are different rates
and bases for payroll tax between states.
As such, businesses face a different set
of rules for each state and territory.
Existing payroll taxes can also be
complex. Businesses with payrolls
below a set threshold amount are not
required to pay payroll taxes. While
this can reduce their tax burden,
it can also impact on their decisions
about expanding.
4
Payroll taxes
31%

6. State and territories also raise revenue
through transaction taxes
Stamp duties on the transfer of property are
a significant source of tax revenue, but can
be volatile.
Stamp duties increase the cost of buying
property and can affect decisions to move
to a better suited home, or for businesses
to move to a new location that may better
suit their needs.4
Insurance taxes increase the cost
of insurance, so some people may
underinsure as a result.5
5
Stamp duties and insurance
taxes as a share of state tax
revenue 2013-141
Stamp duty
on property
23%
Insurance tax
8%

7. Land tax
People need land to live or conduct business. As land can’t be moved this
means broad taxes on land do not affect decisions people and businesses
make about their use of land, making it an efficient way to raise revenue.
All states and territories except
for the Northern Territory have
land taxes on property, but there
are a number of different rates and
concessions for land taxes.
Local governments also levy
taxes on land in the form of
municipal rates.

8. Notes
1. Sources: ABS, Taxation Revenue, Australia, 2013-14; Government Finance Statistics,
Australia, 2013-14.
2. The main categories of GST-exempt spending are fresh food, health, education, rent,
and financial supplies.
3. The top chart shows GST-exempt spending as a percentage of household disposable income.
The bottom chart shows the GST revenue foregone for higher and lower income households as
a share of total GST foregone revenue from all households. Lower (higher) income households
are households in the bottom (top) income quintile based on gross household income.
Source: Treasury estimates using ABS 2011, Household Expenditure Survey 2009-10,
cat. No. 6530.0
4. Independent Economics 2014, Economic impacts of negative gearing of residential property —
report for the Housing Industry Association, Independent Economics, Canberra; and NSW
Treasury 2012, NSW Financial Audit 2011 (‘Lambert review’), NSW Treasury, Sydney.
5. Tooth, R and Barker, G 2007, The Non-Insured: Who, Why and Trends — prepared for the
Insurance Council of Australia.