Understanding Australian Taxes: Part 2

As mentioned in part one of this article, to get a basic understanding of the tax code in Australia, you’ll need to understand the key elements of taxation within the country. These elements include the following;

1.  The major forms of taxation

2.     Government spending and levels of the Australian government

3.    The politics surrounding Australian taxation.

Government Spending and Levels of Government

In part one of this article, the seven major forms of taxation are explained. The second key element can be split up into two parts;

1. Government Spending

2. Levels of Government

First,  it’s important to have an understanding of the locations of government that national revenue goes through. Second, the different levels of government and their roles are just as important.

Government Spending

First, the Governmental Budget is comprised of six spending parts:

A. Welfare: the largest form of government spending and 22% of all tax dollars

B. Health: 19% of government spending is used towards costs associated with health

C. Education: 14% of spending power

D. Infrastructure and Planning: 7% of the budget

E. National Defense: 6% of the budget

F. Everything Else:  32% of the budget on “everything else”  which includes: Industry spending, economy and finance, debt management, criminal justice, superannuation funds, ageing and aged care services, community services, government operations, disability services, foreign affairs, and environment climate change.

The six spending parts above help you get a better understand of where your tax dollars and what they are used towards.

Levels of Government

The Australian Representative Democracy is divided into the three following parts;

A. Federal Government: made up of the Legislature, the Judiciary, and the Executive branches.

B. State Governments: each state government has various duties and roles including creating laws that do not violate the constitution, enforcing the law, and keeping the peace on their own level.

C. Local governments:  help control and maintain peace and justice throughout the country’s cities and suburbs.

The federal, state and local government all make up the body of the Australian democracy system. Each section has a function and role. Without one part, the other government parts wouldn’t have the ability to work as smoothly.

It’s pretty clear that the majority of tax dollars go towards costs associated with health, welfare of Australian citizens. That means, the three levels of government mentioned above work together to not only regulate the budget but also collect tax dollars used in the budget.

These tax dollars used in the Australian government are directly related to why it’s a requirement to not only pay tax but also lodge your taxes. Before it’s too late, lodge your taxes today with AustralianTax.

Part three of this article will explore the third element in taxation; Australian politics.

Photo via Ken Teegardin