The federal budget will become more reliant on personal income tax revenue as other sources dwindle and no action is taken on reaping more from gas and mining firms, a new report says.

The Parliamentary Budget Office on Wednesday released an analysis of the tax system since 2001 and some of the risks ahead.

The main changes since 2001 had been a drop in fuel excise due to fuel efficiency and a previous freeze in indexation, a fall in customs receipts due to free trade deals, and a drop in company tax receipts as losses are carried forward.

Based on recent trends, the report found the future would see a drop in company tax receipts, an increase in personal income tax receipts and drops in consumer tax receipts driven by consumer behaviour and technological change.

“If these risks to tax receipts eventuate, and in the absence of other taxation reforms, maintaining Commonwealth Government revenue at recent levels as a share of GDP will lead to an increasing reliance on taxes on labour income through the personal income tax system,” the report concluded.


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The study found personal income tax already accounted for 53.7 per cent of commonwealth receipts.

In comparison, the report showed resource rent taxes made up 0.4 per cent of receipts.

Petroleum Resource Rent Tax had fallen as a share of GDP since 2001 despite the increase in petroleum production and exports and strong price growth through much of the period.

The report warns that although Australia is set to become a leading producer and exporter of liquefied natural gas, there is a “significant likelihood that this will not translate into higher PRRT revenue”.

Labor’s mining tax was abolished by the coalition in 2014.

Shadow treasurer Chris Bowen said the tax base clearly needed to be broadened, as the government continued to rely on income tax to fund basic services.

“The PBO’s key finding is premised on no tax reform occurring and the only major party going to the next election with a tax reform agenda which broadens Australia’s tax base is the Labor party,” Mr Bowen said.

Labor has announced reform of the taxation of trusts, tax affairs, negative gearing and capital gains tax, as well as removing dividend imputation refundability.

It’s also outlined plans for a “bigger, better and fairer income tax cut” for low and middle income earners than the government had proposed.

Greens spokesman Senator Peter Whish-Wilson said generous deductions for resources companies and rampant tax avoidance meant workers carried the heavier burden.

“Future budgets will still rely on bracket creep because the government’s income tax plan did not fix bracket creep – it just gave lots of money to wealthy people,” Senator Whish-Wilson said.

He said the government needed to abolish capital gains tax concessions, overhaul petroleum taxes, introduce a mining super profits tax and treat multinational tax avoidance more seriously.