05/09/2019 - The pace of tax reforms has slowed across most leading economies and bolder tax reforms will be needed to address future challenges, according to a new OECD report.
Tax Policy Reforms 2019 describes the latest tax reforms across all OECD countries, as well as in Argentina, Indonesia and South Africa. The report identifies major tax policy trends and highlights that fewer countries have introduced comprehensive tax reform packages in 2019 compared to previous years.
The most comprehensive tax reform was introduced in the Netherlands. Other significant tax changes have been implemented in Lithuania (labour taxes), Australia (personal income taxes), Italy (corporate income tax) and Poland (personal and corporate income taxes). In other countries, tax reforms in 2019 have been less significant and often undertaken in a piecemeal fashion.
“At a time when countries are facing many significant challenges, such as weakening economic growth, ageing populations, income and wealth inequality, the changing nature of work and climate change, the appetite for growth-enhancing, structural tax reforms seems to be waning. In the face of these challenges, it is clear that bolder action is needed.” said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration.
The report highlights that corporate tax rate cuts have continued across countries, although they have been less significant than the ones introduced in 2018. Countries that are introducing the most significant corporate tax rate reductions tend to be those that have higher initial tax rates, leading to further convergence in corporate tax rates across countries.
Efforts to fight against corporate tax avoidance have progressed with the adoption of significant reforms in line with the OECD/G20 Base Erosion and Profit Shifting (BEPS) project. The tax challenges arising from the digitalisation of the economy continue to give rise to concerns, with some countries pursuing unilateral measures while global efforts to achieve a consensus-based multilateral solution continue.
The report shows that a number of countries have continued to lower personal income taxes, especially on low and middle-income earners and the elderly. Some countries have also expanded tax incentives to support pension savings and small savers.
Once again this year, there were very few changes to property taxes, confirming that they remain under-utilised in spite of their revenue-raising and equity-enhancing potential, and their positive efficiency properties.
The stabilisation of standard value-added tax (VAT) rates observed across countries in the last few years is continuing. High standard VAT rates have led a number of countries to look for alternative ways of raising additional VAT revenues, in particular through the fight against VAT fraud.
The report also notes continued increases in excise duties on consumer products such as tobacco and sugar-sweetened beverages, and the introduction of new trade tariffs, which could lead to further escalations in the future.
On the other hand, the pace of environmentally related tax reforms has slowed. Several countries have lowered their energy taxes or have weakened their commitment to better aligning energy taxation with climate costs, conflicting with environmental preservation objectives.
Media queries should be directed to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration (+33 1 45 24 91 08), or David Bradbury, Head of the Tax Policy and Statistics Division (+33 1 45 24 98 15 97).