Tax structures are measured by the share of major taxes in total tax revenue. While, on average, tax levels have generally been rising, the share of main taxes in total revenues — the tax structure or tax ‘mix’ — has been remarkably stable over time. Nevertheless, several trends have emerged up to 2010 (the latest year for which data is available for all 34 OECD countries. (Table C)
Personal and corporate income taxes
- Taken together, taxes on personal and corporate incomes remain the most important source of revenues used to finance public spending in just under half of all OECD countries, and in eight of them — Australia, Canada, Denmark, Iceland, New Zealand, Norway, Switzerland and the United States — the share of income taxes in the tax mix exceeds 40 per cent. (Table 6)
- The variation in the share of the personal income tax between countries is considerable. In 2010, it ranged from a low of 8 and 11 per cent in the Slovak Republic and the Czech Republic respectively to 39 per cent in Australia and 51 per cent in Denmark. (Table 10)
- The sharp fall in revenues from corporate income taxes in 2008 and 2009 did not continue into 2010, but the share of these taxes in total revenues remains, at 9%, somewhat below its 11% share in 2007. (Table 12)
- But between 2005 and 2010, the share of the corporate income tax in the tax mix decreased from 10 to 9 percent of total taxes (un-weighted average). Over the previous ten years it had increased by around 2 percentage points to exceed the 9 per cent level of the 1960s.
- The share of the corporate income tax in total tax revenues shows a considerable spread, from 3 per cent (Hungary and Iceland) to 19 per cent (Australia) and 24 per cent (Norway). Apart from the spread in statutory rates of the corporate income tax, these differences are at least partly explained by institutional factors or the exploitation of mineral deposits, for example
- the degree to which firms in a country are incorporated,
- taxation of oil revenues,
- the erosion of the corporate income tax base, for example as a consequence of generous depreciation schemes and
- other instruments to postpone the taxation of earned profits
- OECD countries also show a wide variety in the relative proportions of Social Security Contributions paid by employees and employers (see Tables 16 and 18).
- By 2010, personal income taxes had ceased to be the largest single source of revenue for OECD countries as a whole.
- Their share had declined to 24 per cent of total taxes compared with 30 per cent in the mid 1980s (un-weighted averages).
- About two percentage points of this reduction are attributed to the impact on the average of a number of relatively new entrants to the OECD from Eastern Europe for which tax revenue data is only available from the 1990’s onwards.
- These countries tend to have relatively low personal income tax revenues and high revenues from social security contributions but this impact is observed on the post 1990 data only.
- Between 1965 and 2010, the share of taxes on immovable property, net wealth plus property and legal transactions fell from 8 to 5 per cent of total tax revenues.
- In relative terms, property taxes are important ¾ that is, they have a share exceeding 10 per cent of total tax revenue ¾ in four countries; Canada, Korea, the United Kingdom and the United States. (Table 22)
- The share of taxes on consumption (general consumption taxes plus specific consumption taxes) fell from 36 to 31 per cent between 1965 and 2010.
- But in addition the mix of taxes on goods and services has fundamentally changed. A fast growing revenue source has been general consumption taxes, especially the value-added tax (VAT) which is now found in thirty-three of the thirty-four OECD countries.
- General consumption taxes presently produce 20 per cent of total tax revenue, compared with only 12 per cent in the mid-1960s.
- In fact, the substantially increased importance of the value-added tax has everywhere served to counteract the diminishing share of specific consumption taxes, such as excises and custom duties.
- Between 1965 and 2010 the share of specific taxes on consumption (mostly on tobacco, alcoholic drinks and fuels, including some newly introduced environment-related taxes) was more than halved.
- Rates of taxes on imported goods were considerably reduced everywhere, reflecting a global trend to remove trade barriers.
- Nevertheless, countries such as Mexico (about 30 per cent) and Turkey (one-quarter) still collect a relatively large part of their tax revenues by way of taxes on specific goods and services. (Table 30).
Table C. Tax structure in the OECD-area
Table 6. Tax revenue of main headings as percentage of total taxation, 2009
Table 8. Taxes on income and profits (1000) as percentage of total taxation
Table 10. Taxes on personal income (1100) as percentage of total taxation
Table 12. Taxes on corporate income (1200) as percentage of total taxation
Table 14. Social security contributions (2000) as percentage of total taxation
Table 16. Employees’ social security contributions (2100) as percentage of total taxation
Table 18. Employers’ social security contributions (2200) as percentage of total taxation
Table 20. Taxes on payroll and workforce (3000) as percentage of total taxation
Table 22. Taxes on property (4000) as percentage of total taxation
Table 24. Taxes on goods and services (5000) as percentage of total taxation
Table 26. Consumption taxes (5100) as percentage of total taxation
Table 28. Taxes on general consumption (5110) as percentage of total taxation
Table 30. Taxes on specific goods and services (5120) as percentage of total taxation
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