Tax policy analysis

Revenue Statistics - provisional data on tax ratios for 2014

 

New OECD Revenue Statistics data for 2014

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 34.4% [1] in 2014 compared with 34.2% in 2013 and 33.8% in 2012. The 2014 figure is the highest recorded OECD average tax to GDP ratio since records
began in 1965. (Table A, Table 2)

  • Denmark had the highest tax to GDP ratio in 2014 (50.9%) and Mexico the lowest (19.5%).
  • Of the 30 countries for which data for 2014 are available the ratio of tax revenues to GDP compared to 2013 rose in 16 and fell in 14.
  • Between 2013 and 2014, the largest tax ratio increases were in Denmark (3.3 percentage points explained by an increase in taxes on income and profits as a percentage of GDP) and in Iceland (2.8 due to higher revenues from taxes on goods and services and taxes on income and profits). Other countries with substantial rises in their tax to GDP ratio between 2013 and 2014 were Greece (1.5 percentage points), Estonia (1.1) and New Zealand (1.0).
  • The largest falls in the tax ratio between 2013 and 2014 were in Norway (1.4 percentage points due to a decline in taxes on income and profits) and Czech Republic (0.8 due to a decline in taxes on goods and services). Luxembourg showed a fall of 0.6 percentage points.
  • Compared with 2007 (pre-recession) tax to GDP ratios, the ratio in 2014 was still down by more than 3 percentage points in three countries (Israel, Norway and Spain). The biggest fall has been in Spain, from 36.5% in 2007 to 33.2% of GDP in 2014.
  • The tax burden in Greece increased from 31.2 to 35.9% between 2007 and 2014. Two other countries (Denmark and Turkey) showed increases of 4 percentage points or more over the same period.

 

Final Revenue Statistics data for all OECD countries in 2013

These data show that tax ratios vary considerably across countries. (Chart A)

  • In 2013, Denmark had the highest tax to GDP ratio (47.6%), followed by France, Belgium and Italy.
  • In contrast, eight countries – Australia, Chile, Ireland, Korea, Mexico, Switzerland, Turkey and the United States – had tax ratios of below 30%.
  • Mexico had the lowest ratio at 19.7% followed by Chile at 20.0%.
  • The tax ratio in the OECD area as a whole (un-weighted average) rose by 0.9 percentage points from 2011 to 34.2% in 2013. (Table A)
  • Relative to 2011, overall tax ratios rose in 27 OECD member countries and fell in 7.
  • The largest increases in the ratio were in Denmark (2.2 percentage points), France (2.1), Italy and Portugal (2.0).
  • Six other countries – Belgium, Finland, Hungary, Japan, Slovak Republic and the United States – saw increases between 1.7 and 1.9 percentage points from 2011 to 2013.
  • The largest reductions were in Norway (1.5 percentage points) and Chile (1.2).
 

Key changes in the tax to GDP ratio of the main tax headings between 2011 and 2013

  • Revenues from taxes on income (personal and corporate income taxes together) as a percentage of GDP increased from 11.1% in 2011 to 11.5% in 2013 on average. The largest increases were in Denmark and Portugal (1.9 percentage points). Norway and Chile reported the largest falls in this ratio (by 1.8 and 1.6 percentage points of GDP respectively). (Table B)
  • There were increases in the corresponding ratios for:
    • Social security contributions from 8.9 to 9.1%. (Table 13)
    • Property taxes from 1.8 to 1.9%. (Table 21)
    • Taxes on goods and services from 10.8 to 11.0%. (Table 23)
  • The ratio was unchanged for payroll taxes at 0.4% of GDP in both years. (Table 19)

 

Interpret tax revenues measured as a % of GDP with caution

Aggregate tax ratios often figure prominently in policy debates and they are sometimes linked directly to the economic performance of nations. A special feature included in section S.2 of the 1999 edition of this Report explained why figures on tax revenues measured as a percentage of GDP should generally be interpreted with caution. More specifically, the revised guidelines set out in the 2008 System of National Accounts (SNA) that have been used to estimate the value of GDP for 31 of the 34 OECD countries, have resulting in higher GDP levels. As a consequence, the revised tax ratios reported in this publication are lower than tax to GDP ratios before these revisions. To limit any distortionary impact over the reporting period, the present edition of the Report employs revised GDP estimates for 1965 and later years in those cases where OECD countries have not reported revised GDP figures. The scale of the GDP revisions is considered in greater detail in the “Methodology issues” page.

 


[1] Calculated by applying the unweighted average percentage change for 2014 in the 30 countries providing data for that year to the overall average tax to GDP ratio in 2013.

 

Downloadable tables/figures 

 

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