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  • The performance of the tax system

    Understanding the tax gap allows us to understand the overall performance of the tax system as a whole. Our progressive releases of tax gaps hit a milestone in 2019 with the release of the small business tax gap. We now have over 92% of the overall tax base with gap measures in place for the 2015–16 financial year, which is the latest year in which we have complete data. Future ongoing annual releases will see us achieve full coverage of the tax base for this and future years.

    For the ten published tax gaps, out of 15 direct and indirect tax gaps, we see $337 billion in overall tax paid and a resulting tax gap estimate of $28 billion. This gives us an overall estimate of published gaps of 7.6% indicating that, for 2015–16, over 92% of tax we expect to receive is received, the bulk of which is voluntary.

    Figure 1: Tax performance for published tax gaps in 2015–16

    Figure 1: This graph displays the tax performance and tax gap as a percentage of the total revenue that we should receive under the law. The amount of revenue we receive is 92% of expected revenue (tax performance). Therefore, the total tax gap is about 8%.

    For the five unpublished tax gaps, we see approximately $31 billion in overall tax paid. If these unpublished gaps are similar to the gaps we have published, then the potential tax gap would be between $1.6 billion to $3.4 billion. This means the total tax gap estimate for 2015–16 would be somewhere between $29 billion and $31 billion. This indicates that, for the 2015–16 financial year, we expect to receive $397 billion to $399 billion, with the vast bulk ($368 billion) received voluntarily.

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      Last modified: 14 Nov 2019QC 53161