Tax policy analysis - Organisation for Economic Co-operation and Development

Tax policy analysis - Organisation for Economic Co-operation and Development:

New OECD data in the annual Revenue Statistics publication show that tax revenues as a percentage of GDP continue to recover gradually from the falls in almost all countries in 2008 and 2009 that stemmed from the financial and economic crisis. The average tax to GDP ratio in OECD countries was 34.6 per cent [1] in 2012 compared with 34.1 per cent in 2011 and 33.8 per cent in 2010. This is still below the most recent peak year of 2007 when tax revenues to GDP ratios averaged 35.0 per cent (Table A, Table 2)

• Denmark had the highest tax to GDP ratio in 2012 (48.0 per cent) and Mexico the lowest (19.6 per cent).
• Of the 30 countries for which data for 2012 are available the ratio of tax revenues to GDP compared to 2011 rose in 21 and fell in only 9.
• Between 2011 and 2012, the largest tax ratio increases were in Hungary (1.8 percentage points explained by both taxes on goods and services and taxes on income) and in Greece (1.6 primarily due to higher taxes on income as a percentage of GDP).  Other countries with substantial rises in their tax to GDP ratio between 2011 and 2012 were Italy and New Zealand (1.4 percentage points), Belgium, Iceland and France (1.2).
• The largest fall in the tax ratio between 2011 and 2012 was in Israel with a decline of one percentage point from 32.6 per cent to 31.6 per cent, driven largely by a reduction in taxes on goods and services as a share of GDP.  Portugal and the United Kingdom showed falls of 0.5 percentage points.
• Compared with 2007 (pre-recession) tax to GDP ratios, the ratio in 2012 was still down by more than three percentage points in four countries (Iceland , Israel, Spain and Sweden).  The biggest fall has been in Israel, from 36.4 per cent in 2007 to 31.6 per cent of GDP in 2012.
• The tax burden in Turkey increased from 24.1 per cent to 27.7 per cent between 2007 and 2012.  Four other countries (Belgium, France, Luxembourg and Mexico) showed increases of more than 1.5 percentage points over the same period. 

The latest year for which tax to GDP ratios are based on final revenue data and available for all OECD countries is 2011 (Chart A). These data show that tax ratios vary considerably across countries.

• In 2011, Denmark had the highest tax to GDP ratio (47.7 per cent), followed by, Sweden, Belgium and France.
• In contrast, ten countries - Australia, Chile, Ireland, Japan, Korea, Mexico, the Slovak Republic, Switzerland, Turkey and the United States - had tax ratios of below 30 per cent.
• Mexico had the lowest ratio at 19.7 per cent followed by Chile at 21.2 per cent.
• The tax ratio in the OECD area as a whole (un-weighted average) rose by 0.3 percentage points from 2010 to 34.1 per cent in 2011. (Table A).
• Relative to 2010, overall tax ratios rose in 24 OECD member countries and fell in 9.
• The largest increases in the ratio were in Portugal (1.8 percentage points), Chile (1.7) and Turkey (1.6).
• Four other countries – the Czech Republic, Finland, France and Japan – saw increases of one percentage point or more between 2010 and 2011.
• The largest reductions were in Estonia (1.7 percentage points), Sweden (1.2) and Slovenia (1.0).

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