FactCheck: was Christian Porter right about welfare spending and income tax?



Social security and welfare spend as a percentage of personal income tax take, 2004-05 to 2016-17

0% 20% 40% 60% 80% 100% 2004-052005-062006-072007-082008-092009-102010-112011-122012-132013-142014-152015-162016-17

Areas shaded blue are federal budgets delivered by Coalition governments; areas shaded red are federal budgets delivered by Labor governments. Figures for 2016-17 are estimates, as the financial year does not end until June 30 this year.

While personal income tax is the single largest source of income for the Commonwealth, and welfare and social security is the single largest expense title in the federal budget, personal income tax is not specifically collected to pay the welfare bill.

Most taxes are not collected in order to cover a specific expense – an exception is perhaps the Medicare levy. Suggesting such relationships can be detrimental and misleading.

Also, even if welfare spending were more than 100% of the personal income tax intake, this situation would not necessarily be “an unsustainable position that simply puts the burden of welfare payments on future generations through higher debt”, as Porter stated.

In the financial year 2008-09, total revenue from direct and indirect taxes was $272.6 billion; in 2016-17 it was $377.2 billion. In both years, about half of Commonwealth tax revenue came from sources other than personal income tax.

So, dubbing the situation “unsustainable” and suggesting that welfare spending must be financed “through higher debt” is misleading. – Rodrigo Praino and Gerry Redmond

https://theconversation.com/factcheck-was-christian-porter-right-about-welfare-spending-and-income-tax-78609?utm_medium=email&utm_campaign=The%20Weekend%20Conversation%20-%2077366119&utm_content=The%20Weekend%20Conversation%20-%2077366119+CID_5053a7faec7a585682f198b5f36f9188&utm_source=campaign_monitor&utm_term=FactCheck%20was%20Christian%20Porter%20right%20about%20welfare%20spending%20and%20income%20tax

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