Taxes on consumption continue to grow

In 1965 consumption taxes accounted for 3.8% of GDP across the OECD; by 2006 this had increased to 6.8%. Over the same period the number of countries using a VAT – one of the forms of general consumption taxes – rose from around 10 to in excess of 140. These, and other, developments are explained in the 2008 issue of “Consumption Tax Trends”, published by the OECD in December.

The publication looks at all forms of taxes on consumption including  value added taxes,  general sales taxes and excise taxes. It provides data to show how each of these taxes have developed since 1965. What is clear from the data is that these consumption taxes now account for around a third of the total tax revenue in the OECD area.

Other issues covered in the publication include:

• What difficulties do business and governments encounter in applying VAT/GST to cross-border sales?
• Which countries have the best performing VAT/GST systems?
• Have excise taxes – or “sin” taxes on smoking, drinking and driving – decreased in importance?
• How does tax affect the costs of buying and registering a new car in OECD countries?

For the first time “Consumption Tax Trends” includes a section on the experience of consumption taxes in three significant non-OECD countries – China, India and Russia.

In addition there are the usual sections illustrating the share of consumption taxes in overall tax revenues and as a percentage of GDP plus data on VAT/GST rates, exemptions, excise rates and motor vehicle taxes.