Tax-to-GDP increased in most advanced countries from the late 1960s to the late 1980s as demand for government services increased. For Australia, much of this revenue increase came from taxes on individuals. While the tax cuts associated with the introduction of the GST in 2000 reduced our reliance on personal income tax, bracket creep has pushed the share of personal income tax to half of all Commonwealth tax receipts in 2022-23, and this is projected to increase over the next decade.

Without bracket creep, debt would continue to rise as a share of GDP over the next decade. But this would see a decline in progressivity as more tax is collected from middle-income earners in particular. Under current policy settings, bracket creep, combined with an ageing population, is projected to push up average tax rates on working individuals to their highest level over the next decade.

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