Tax policy analysis

Revenue Statistics tax to GDP ratio changes between 2007 and provisional 2013 data

 

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 34.1% [1] in 2013 compared with 33.7% in 2012 and 33.3% in 2011. This is still below the most recent peak year of 2007, when tax revenues to GDP ratios averaged 34.2%  (Table A, Table 2)

  • Denmark had the highest tax to GDP ratio in 2013 (48.6%) and Mexico the lowest (19.7%).
  • Of the 30 countries for which data for 2013 are available the ratio of tax revenues to GDP compared to 2012 rose in 21 and fell in only 9.
  • Between 2012 and 2013, the largest tax ratio increases were in Portugal (2.2 percentage points explained by an increase in taxes on income and profits as a percentage of GDP) and in Turkey (1.7 due to higher revenues from taxes on goods and services and social security contributions). Other countries with substantial rises in their tax to GDP ratio between 2012 and 2013, were the Slovak Republic (1.5 percentage points), Denmark (1.4) and Finland (1.2).
  • The largest falls in the tax ratio between 2012 and 2013 were in Norway (1.5 percentage points) and Chile (1.2) both due to a decline in taxes on income and profits. New Zealand showed a fall of 0.9 percentage points.
  • Compared with 2007 (pre-recession) tax to GDP ratios, the ratio in 2013 was still down by more than three percentage points in three countries (Iceland, Israel and Spain). The biggest fall has been in Israel, from 34.7% in 2007 to 30.5% of GDP in 2013.
  • The tax burden in Turkey increased from 24.1% to 29.3% between 2007 and 2013. Three other countries (Finland, France, and Greece) showed increases of 2.5 percentage points or more 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 2012 (Chart A). These data show that tax ratios vary considerably across countries.

  • In 2012, Denmark had the highest tax to GDP ratio (47.2%), followed by France, Belgium and Finland.
  • In contrast, eleven countries - Australia, Chile, Ireland, Israel, Japan, Korea, Mexico, the Slovak Republic, Switzerland, Turkey and the United States - had tax ratios of below 30%.
  • Mexico had the lowest ratio at 19.6% followed by Chile at 21.4%.
  • The tax ratio in the OECD area as a whole (unweighted average) rose by 0.4 percentage points from 2011 to 33.7% in 2012 (Table A).
  • Relative to 2011, overall tax ratios rose in 26 OECD member countries, fell in 7 and remained unchanged in 1.
  • The largest increases in the ratio were in Hungary and New Zealand (1.6 percentage points) and Italy (1.4).
  • Four other countries – Belgium, France, Greece and Italy – saw increases of more than one percentage point between 2011 and 2012.
  • The largest reductions were in Israel (1.2 percentage points), and Portugal (0.8).

 

The key changes in the tax to GDP ratio of the main tax headings between 2011 and 2012 were as follows:

  • Revenues from taxes on income (personal and corporate income taxes together) as a percentage of GDP increased from 11.2% in 2011 to 11.4% in 2012 on average. The largest increases were in New Zealand (1.5 percentage points) and Greece (1.2). Twenty-three other countries saw this ratio increase but by less than one percentage point. Portugal and the United Kingdom reported the largest falls in this ratio (by 0.6 percentage points of GDP) (Table B).
  • The corresponding ratio for social security contributions remained steady at 8.9-9.0% of GDP in both 2011 and 2012 (Table 13).
  • Ratios were essentially unchanged for both payroll taxes (0.4% of GDP in both years) and property taxes (1.7-1.8% of GDP in both years) (Table 19 and Table 21).
  • The ratio of taxes on goods and services to GDP remained steady at 10.8% in both years (Table 23).

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 29 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 2013 in the 30 countries providing data for that year to the overall average tax to GDP ratio in 2012.

 

Downloadable tables/figures 

Chart A. Total tax revenue as percentage of GDP

Table A. Total tax revenue as percentage of GDP

Table B. Taxes on income and profits as percentage of GDP

Table 2. Total tax revenue as percentage of GDP, 1965-2012

Table 5. Tax revenue of main headings as percentage of GDP, 2012

Table 7. Taxes on income and profits (1000) as percentage of GDP

Table 9. Taxes on personal income (1100) as percentage of GDP

Table 11. Taxes on corporate income (1200) as percentage of GDP

Table 13. Social security contributions (2000) as percentage of GDP

Table 15. Employees’ social security contributions (2100) as percentage of GDP

Table 17. Employers’ social security contributions (2200) as percentage of GDP

Table 19. Taxes on payroll and workforce (3000) as percentage of GDP

Table 21. Taxes on property (4000) as percentage of GDP

Table 23. Taxes on goods and services (5000) as percentage of GDP

Table 25. Consumption taxes (5100) as percentage of GDP

Table 27. Taxes on general consumption (5110) as percentage of GDP

Table 29. Taxes on specific goods and services (5120) as percentage of GDP

Table 38. Estimates of tax revenues as percentage of GDP, 2013

 

 

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