Rising living costs, the high visibility of income tax, concerns about whether big business pays its fair share, and doubts about value for money relating to public services are the four main reasons Australians believe they are paying too much tax.
New research, which examines 14 years of tax surveys, found that cost-of-living pressures were primarily behind perceptions of over-taxation.
Conducted by UNSW Business School Emeritus Professor Fiona Martin and Curtin Law School Senior Lecturer Christina Allen, the research paper, Insights into Australians’ Perceptions of Over-Taxation, appeared in Australian Tax Forum (41(2) 2026).
It is based on Per Capita’s 14 tax surveys from 2010 to 2024, each drawing on between 1008 and 1557 respondents, as well as OECD, World Bank and Australian Bureau of Statistics data. The findings show correlation, but not proven causes.
“The catalyst for this research was the constant stream of media stating that Australia is a high-taxed country when all data indicates that this is not the case,” said Prof. Martin.
Income tax visibility and over-taxation
One reason why Australians believe they are over-taxed is ‘tax salience’, or how noticeable a tax is to the person paying it. Personal income tax comprised 42.6% of Australia’s tax revenue in 2023 (the second-highest share in the OECD), and most workers see it withheld from their pay and again at tax time. GST accounted for 11.4% of tax revenue in 2022, compared with an OECD average of 20.8% for VAT and GST. This is the second lowest among all OECD countries; the only country lower is the United States, which does not have a federal GST.
“Public resistance to taxation may arise even in comparatively low-tax jurisdictions where taxpayers perceive highly visible taxes as burdensome,” the authors wrote in their research paper, which also noted that, even though Australia collects less tax than most OECD countries, almost half of Australians say they pay too much tax (the highest share in more than a decade).
“The research suggests that Australia’s personal income tax may contribute to perceptions of over-taxation because taxpayers experience this tax directly and repeatedly through deductions from their earnings,” said Prof. Martin. “This highlights the importance of considering the visibility and composition of taxation, rather than solely on aggregate tax revenue, when assessing public attitudes towards tax burdens.”
Bracket creep and the stage 3 tax cuts
Working households have also faced bracket creep. This happens when pay rises that do not keep pace with inflation still push more income into higher tax brackets. The Household, Income and Labour Dynamics in Australia (HILDA) Survey shows the average tax rate for full-time workers reached 20.3% in 2023. That is the highest in the survey’s records dating back to 2001.
The mid-2024 stage 3 tax cuts do not appear to have eased perceptions of the tax burden, the authors observed, and tax thresholds remain unindexed to inflation. In 2024, more than half of respondents in household income groups above $80,000 said they paid too much tax.
The research found that the share of Australians who believe low-income earners pay too much tax did not rise sharply in 2023, though those households also faced inflation. The authors say this suggests rising prices alone may not fully explain the trend.
“The survey findings also suggest that cost-of-living pressures and bracket creep do not fully explain these perceptions,” said Prof. Martin. “Other factors, including concerns about fairness and the distribution of tax burdens, may contribute to how Australians evaluate their tax obligations.”
Corporate tax avoidance and tax fairness
There are also concerns about the fairness of Australia’s taxation system. In 2024, 74% of respondents said large businesses and corporations pay too little tax, and 64.5% said the same of high-income earners. Asked how governments should fund more public spending, 50.9% backed a crackdown on corporate tax avoidance. Only 33% supported a higher income tax on the top 5% of earners.
The authors warn that sustained public focus on large enterprises not paying their “fair share” carries a risk for people’s willingness to pay tax. It “may weaken taxpayer morale by encouraging small businesses and individuals to question why they should comply when large corporations are perceived not to do so”, the researchers note in their paper.
For high-income earners and large corporations, the authors note that gaps between the effective tax rate (the share of income actually paid) and the rate set by law can reflect legitimate policy objectives, deductions, timing rules, and other features built into the system. However, a lack of understanding of these features can fuel perceptions of underpayment.
“Greater transparency about the operation and purpose of tax concessions, deductions and other policy measures may help taxpayers distinguish between legitimate differences in effective tax rates and corporate tax avoidance,” said Prof. Martin.
Public spending, ageing and workforce participation
Since 2014, respondents have also rated public services lower on value for money than on quality and usefulness. Yet an average of 67.7% across the surveys in the research supported increased spending on public services, with health and education leading. Health and aged care – the services respondents have most often said would justify higher taxes – are among those expected to face the most spending pressure as the population ages.
Respondents aged 25 to 64, who pay the largest share of income tax, consistently report the highest rates of feeling over-taxed. In 2024, 23.3% of those aged 65 and over said they paid too much, though the research found this group is under-represented in the surveys.
The authors also highlighted the role of effective marginal tax rates. This is the share of each extra dollar earned that a household loses to taxes and reduced welfare payments. These rates weigh most on secondary earners (typically a lower-earning partner who takes on more hours of work). The research suggests that tax relief at lower income thresholds, or adjusting the rate at which payments reduce as income rises, is more likely to lift workforce participation than cuts to top tax rates.
The authors said efforts to maintain public confidence required attention to revenue collection and to “transparency, fairness and the visibility of the benefits financed through taxation”. They said that more information on comparative tax burdens, the interaction between tax and transfer payments and public spending may help future debate on tax reform.
“The findings highlight the importance of considering taxation and public expenditure together. Greater transparency about how tax revenue is spent, who benefits from public services and how tax burdens are distributed may contribute to a more informed public debate about Australia’s fiscal sustainability,” Prof. Martin concluded.
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