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The Growth of Contractors in the Construction Industry: Implications for Tax Revenue

Published online by Cambridge University Press:  01 January 2023

John Buchanan  and
Cameron Allan
John Buchanan
Affiliation:
Australian Centre for Industrial Relations Research and Training, University of Sydney
Cameron Allan
Affiliation:
School of Industrial Relations, Griffith University
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Abstract

This paper is a preliminary investigation of the impact of the changing legal structures of employment on the tax system and the tax system on the structure of jobs. This issue is explored with special reference to the growth of contractor employment in the Australian construction industry. The paper shows how tax liabilities for individuals can be halved where they are deemed to be contractors. The paper estimates that in the mid 1990s this resulted in the average construction contractor paying around $6,000 a year less than equivalent PAYE workers. Losses to tax revenue could, therefore, be up $2.2 billion annually. The paper concludes that more research is required into the nexus between tax and employment structures. This dynamic has major implications for the future of work as well as the taxation system.

Type
Research Article
Information
The Economic and Labour Relations Review , Volume 11 , Issue 1 , June 2000 , pp. 46 - 75
Copyright
Copyright © The Author(s) 2000

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Footnotes

*

The following have assisted in various ways in the production of this paper: Patricia Apps, Alex Bukarica, Tom Roberts, Bob Mills, anonymous officials at the Australian Tax Office and NSW Building and Construction Long Service Payments Corporation, Mark Harvey, Bob Cathcart, Andrew Wilson and Stephen Kampers. Very detailed and extremely helpful comments were provided by an anonymous referee. Funding for the project was provided by the Construction, Forestry, Mining and Energy Union. All errors of fact and analysis are those of the authors.

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