The 51 per cent figure is reached by taking the 45 per cent top marginal tax rate and adding a 4 per cent Medicare levy, plus the 2 per cent budget repair levy, which runs until 2017.

The top rate has not been that high since 1986.

"Personal tax rates are already too high and uncompetitive with our neighbours," KPMG tax partner Grant Wardell-Johnson said.

"We would be better off increasing the base, as well as rate of GST, with suitable compensation for lower-paid individuals."

More than they keep

At 51 per cent some taxpayers would give the government more money in tax than they were able to take keep, PwC managing partner Tom Seymour said.

"That's a big psychological barrier, that in a week you'd get to something like Wednesday afternoon before you'd make any money for yourself," he said.


Most developed nations are reducing their reliance on corporate and personal income tax revenue in favour of broad-based consumption taxes like the GST because the consumption taxes create less harm in an economy. Income taxes, on the other hand, penalise people and businesses for earning money.

"In our view it would be economically unwise to increase the rate of the Medicare levy because you'd just be adding to personal tax," Mr Seymour said.

The Australian government is already relying on bracket creep, which is where taxpayers move into higher tax brackets because of wages growth without corresponding tax cuts, to do most of the heavily lifting to eventually return the budget to surplus.

Even without another Medicare levy hike the average taxpayer on $78,000 is expected to hit the second-highest tax rate of 37 per cent, not including the current 2 per cent Medicare levy, as inflation pushes incomes into higher-taxing income brackets.

Recent modelling by PwC shows individual taxpayers will already pay $45 billion in extra income tax over the next five years if there is no change to personal income tax to compensate for bracket creep.

"[Bracket creep] just happens with inflation and it's actually costing Australians a lot more than a broadening of the GST would cost," Mr Seymour said.

"The only reason people in the street aren't screaming in the street about bracket creep, like politicians are worried they will do about GST, is because bracket creep is silent."

Corporate tax, personal tax and GST contribute about 85 per cent of all of Australia's tax revenue, with corporate and personal tax accounting for 70 per cent of tax revenue.

The Organisation for Economic Co-operation and Development average for corporate and personal income taxes as a proportion of all tax revenue was 35 per cent, Mr Seymour said.