Nordic nations deliver high quality services and reduce income inequality by taxing people more and Australia could learn from them, a report says.
Australia could be a more prosperous country if it follows in the lead of Nordic nations and taxes people more.
Claims that Australian companies are paying among the world's highest taxes are also misleading, a study released on Thursday has found.
The research paper is the first released by a new policy centre involving progressive think tank The Australia Institute and Deakin University.
The centre is focused on the lessons Australia can learn from Nordic countries such as Sweden, Finland, Denmark and Norway.
The four countries are among the most equal in the world in terms of income distribution and the most highly-ranked in terms of factors that determine prosperity, the report states.
But they are also among the highest taxing in the world, ranking among the top five taxing nations in the 32 countries that make up the OECD.
Tax and other government revenue makes up 35.3 per cent of Australia's gross domestic product, putting it in the bottom six OECD nations.
In the four Nordic countries examined, it is more than half of GDP.
That tax revenue is integral to providing services such as high-quality education - including free university - health, public transport and quality infrastructure, report author Andrew Scott says.
Tax is also used to fund policies that support work-life balance, such as paid parental leave.
Professor Scott says the Nordic populations are happy to support their governments' revenue-raising efforts because they all benefit from such measures.
"In contrast, the selective and minimal welfare arrangements that apply in low-tax countries, like Australia and America, contribute to spiralling hostility towards many welfare recipients," he says.
His report also pushes back against claims Australian companies are paying higher taxes in a global context, noting Australia is one of the few OECD countries in which corporations are not required to pay any social security contributions.
"Claims that Australian companies are paying among the world's highest levels of taxes overall are therefore false and misleading," he says.
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