OECD Centres Germany Berlin (49-30) 288 8353 Japan Tokyo (81-3) 5532-0021 Mexico Mexico (52-55) 5281 3810 United States Washington (1-202) 785 6323 AUSTRALIA AUSTRIA BELGIUM CANADA CZECH REPUBLIC DENMARK FINLAND FRANCE GERMANY GREECE HUNGARY ICELAND IRELAND ITALY JAPAN KOREA LUXEMBOURG MEXICO NETHERLANDS NEW ZEALAND NORWAY POLAND PORTUGAL SLOVAK REPUBLIC SPAIN SWEDEN SWITZERLAND TURKEY UNITED KINGDOM UNITED STATES PAC/COM/PUB(2002)15 Paris, 10 October 2002 OECD Report Shows Tax Burdens Falling in Many OECD Countries Tax burdens as measured by the ratio of tax to GDP fell in fifteen OECD countries between 2000 and 2001, suggesting a break in a trend of continuous increases in the OECD average tax-to-gdp ratio during the previous five years. Provisional figures in the latest edition of the OECD s Revenue Statistics show that the average taxto-gdp ratio for the 25 OECD countries for which 2001 figures are available fell by one tenth of a percentage point last year. Between 1995 and 2000, the average tax-to-gdp ratio for all 30 OECD countries rose from 36.1% to 37.4% (see Table A). Figures for 2001 are still not available for five OECD countries. Steady growth in OECD tax-to-gdp ratios over the preceding five years, despite widespread cuts in tax rates, illustrates the complex factors that determine tax burdens. Part of the explanation for the rise lay in rapid economic growth, which increased company profits and lifted individual incomes into higher tax brackets. This is evidenced by an increase in the OECD average ratio of taxes on incomes and profits as a percentage of GDP from 12.8% in 1995 to 13.6% in 2000 (see Table B). The recent slowdown in the world economy, by reducing that effect, is likely to result in some of the tax cuts having their expected result of reducing tax-to-gdp ratios. However, the enormous variety of country experiences shown in the report s tables illustrates that there is no single explanation for changing tax burdens. Some conflicting trends include: A very wide range of changes to tax-to-gdp ratios between 2000 and 2001 among the countries for which figures are available. While Norway s ratio increased by 4.6% due in part to volatile revenues from oil, for example, the Slovak Republic experienced a decrease of 2.7 percentage points. Other factors beside income tax revenues also play a role. Korea s tax-to-gdp ratio rose because of higher revenues from consumption taxes, while Turkey s rose due to higher revenues from social security contributions. In addition, the value of tax-to-gdp ratios as a basis for comparison between countries is limited by differences in the mix of tax reliefs (which reduce the tax-gdp ratio) and cash benefits (which do not) used to pursue social objectives such as assisting families with children. Also, countries differ in the extent to which they tax government-provided social benefits, and so increase their tax-to-gdp ratio without adding to the tax burden on economic activities. JT00132975 OECD Media Relations General Inquiries: Tel. (33) 1 45 24 97 00 - Fax. (33)1 45 24 80 03/94 37 Research & Documentation: Tel. (33) 1 45 24 80 88/80 89 www.oecd.org/media E-mail: news.contact@oecd.org Organisation for Economic Co-operation and Development, 2 rue André-Pascal, 75775 Paris Cedex 16, France Tel. (33) 1 45 24 82 00 - Fax. (33) 1 45 24 85 00 www.oecd.org
A special feature in this year s edition of Revenue Statistics highlights the large differences in compulsory social security contributions across OECD countries, in terms of ratios to GDP and share of tax revenues. (see Table C). Among other things, this shows that: Continental European countries have relatively high social security contributions because of their extensive social safety nets and population ageing. At the other end of the spectrum, Ireland, Korea, Canada, Britain and the U.S. have relatively low contributions because they finance a significant part of their social benefits from other taxes and because the scope of their social security programmes tends to be smaller. Denmark combines extensive social benefits with low social security contributions, raising much of the necessary finance through other taxes. Australia and New Zealand levy no social security contributions, as they finance social benefits entirely through other taxes. Journalists may obtain this report from the OECD s media protected website (http://www1.oecd.org/media/journalists/journalists.htm) or from the OECD Media Relations Division (request by fax 33 1 45 24 80 03 or news.contact@oecd.org). For futher information and comment, please contact Christopher Heady, OECD s Centre for Tax Policy and Administration (tel. [33] 1 45 24 93 22 or christopher.heady@oecd.org). ------------------------------ Revenue Statistics 1965-2001 326 pages, OECD, Paris 2002 75 ISBN 92-64-09885-2 (23 02 07 3). 2
Table A. Total tax revenue as percentage of GDP 3URYLVLRQDO Canada 31.9 32.6 35.9 35.6 35.9 35.8 35.2 Mexico 17.0 17.3 16.6 17.3 18.5 18.3 United States 26.9 26.1 26.7 27.6 28.9 29.6 n.a. Australia 26.6 29.1 29.3 29.7 30.7 31.5 n.a. Japan 21.2 27.2 30.1 27.7 26.1 27.1 n.a. Korea 15.3 16.9 19.1 20.5 23.6 26.1 27.5 New Zealand 30.4 32.9 37.6 37.5 34.9 35.1 34.8 Austria 37.4 41.9 40.4 41.6 44.1 43.7 45.7 Belgium 40.1 45.6 43.2 44.6 45.4 45.6 45.3 Czech Republic 40.1 39.2 39.4 39.0 Denmark 40.0 47.4 47.1 49.4 51.2 48.8 49.0 Finland 36.8 40.1 44.8 45.0 46.8 46.9 46.3 France 35.9 43.8 43.0 44.0 45.7 45.3 45.4 Germany 1 35.3 37.2 35.7 38.2 37.8 37.9 36.4 Greece 21.8 28.6 29.3 31.7 36.9 37.8 40.8 Hungary 42.4 39.1 39.1 38.6 Iceland 29.4 28.3 31.2 31.5 36.9 37.3 34.8 Ireland 29.1 35.0 33.5 32.7 31.3 31.1 29.2 Italy 26.1 34.4 38.9 41.2 43.3 42.0 41.8 Luxembourg 37.3 44.8 40.8 42.0 40.9 41.7 42.4 Netherlands 41.6 42.6 43.0 41.9 41.2 41.4 39.9 Norway 39.3 43.3 41.8 41.5 41.6 40.3 44.9 Poland 39.6 35.2 34.1 n.a. Portugal 20.8 26.6 29.2 32.5 34.1 34.5 n.a. Slovak Republic 35.3 35.8 33.1 Spain 18.8 27.8 33.2 32.8 35.0 35.2 35.2 Sweden 2 42.3 48.5 53.6 47.6 52.0 54.2 53.2 Switzerland 27.9 30.2 30.6 33.1 34.5 35.7 34.5 Turkey 16.0 15.4 20.0 22.6 31.3 33.4 35.8 United Kingdom 35.3 37.7 36.8 34.8 36.4 37.4 37.4 8QZHLJKWHG DYHUDJH OECD Total 30.5 33.9 35.1 36.1 37.1 37.4 OECD America 29.4 25.2 26.7 26.6 27.4 28.0 OECD Pacific 23.4 26.5 29.0 28.9 28.8 30.0 OECD Europe 32.2 36.8 37.7 38.7 39.8 39.9 EU 15 33.2 38.8 39.5 40.0 41.5 41.6 1. Unified Germany beginning in 1991. 2. The figures in the table match those in the Revenue Statistics. After the publication went to press in July 2002, the Swedish authorities provided updated information about their tax revenues for 2000 and 2001. The updated information implies that total tax revenues as percentage of GDP was 53.6 in 2000 and 50.8 in 2001. 3
Table B. Taxes on income and profits as percentage of GDP 1975 1985 1990 1995 1999 2000 2001 Provisional Canada 15.1 14.4 17.4 16.5 17.7 17.5 16.9 Mexico 3.8 4.7 4.1 5.0 5.0 5.3 United States 12.4 11.8 12.1 12.6 14.2 15.1 n.a. Australia 14.9 15.9 16.7 16.4 18.2 18.0 n.a. Japan 9.5 12.4 14.6 10.2 8.2 9.2 n.a. Korea 3.7 4.5 6.2 6.5 5.8 7.5 7.3 New Zealand 20.3 22.6 21.7 22.7 19.9 20.8 20.3 Austria 9.8 11.1 10.3 11.1 12.6 12.4 14.4 Belgium 16.1 18.8 16.3 17.3 17.5 17.9 17.9 Czech Republic 9.9 8.8 8.9 9.2 Denmark 23.6 27.1 27.6 30.0 30.2 28.7 28.9 Finland 17.7 18.1 19.4 18.1 19.2 20.0 19.1 France 5.7 7.0 7.4 7.1 11.0 11.3 11.6 Germany 1 12.1 12.9 11.6 11.6 11.3 11.4 10.0 Greece 2.9 5.0 5.8 7.2 9.7 10.5 13.9 Hungary 8.9 9.1 9.5 10.0 Iceland 6.7 6.4 9.2 10.7 14.4 14.9 14.7 Ireland 8.7 12.1 12.3 12.8 13.4 13.3 12.7 Italy 5.6 12.7 14.2 14.5 14.7 13.9 14.9 Luxembourg 16.2 19.4 16.0 16.3 15.0 15.0 15.2 Netherlands 14.5 11.2 13.8 11.1 10.5 10.4 10.7 Norway 13.5 17.2 14.7 14.6 14.9 16.4 20.7 Poland 12.1 10.7 10.2 n.a. Portugal 3.6 6.8 7.5 8.5 9.8 10.3 n.a. Slovak Republic 8.5 7.6 6.8 Spain 4.2 7.3 10.2 9.6 9.8 9.8 10.0 Sweden 2 21.3 20.5 22.3 19.7 21.6 23.4 22.2 Switzerland 12.3 12.2 12.5 12.2 12.5 13.8 12.8 Turkey 6.8 5.7 6.7 6.4 9.8 9.5 10.0 United Kingdom 15.8 14.6 14.1 12.7 14.1 14.6 14.9 Unweighted average: OECD Total 11.7 12.8 13.3 12.8 13.3 13.6 OECD America 13.7 10.0 11.4 11.1 12.3 12.6 OECD Pacific 12.1 13.9 14.8 14.0 13.0 13.9 OECD Europe 11.4 13.0 13.3 12.8 13.4 13.6 EU 15 11.9 13.6 13.9 13.8 14.7 14.9 1. Unified Germany beginning in 1991. 2. The figures in the table match those in the Revenue Statistics. After the publication went to press in July 2002, the Swedish authorities provided updated information about their tax revenues for 2000 and 2001. The updated information implies that taxes on income and profits as percentage of GDP was 22.7 in 2000 and 19.8 in 2001. 4
Table C: Social security contributions, 2000 a % of GDP % of total tax revenues Czech Republic 17.3 43.8 France 16.4 36.1 Netherlands 16.1 38.9 Sweden E 15.2 28.1 Austria 14.9 34.2 Germany 14.8 39.0 Slovak Republic 14.7 41.2 Belgium 14.1 30.9 Spain 12.4 35.1 Switzerland 12.0 33.6 Finland 12.0 25.6 Italy 11.9 28.5 Hungary 11.5 29.3 Greece 11.4 30.1 Luxembourg 10.7 25.6 Poland 10.0 29.4 Japan 9.9 36.5 Norway 9.0 22.5 Portugal 8.8 25.7 United States 6.9 23.3 United Kingdom 6.1 16.4 Turkey 5.6 16.9 Canada 5.1 14.3 Korea 4.4 16.7 Ireland 4.2 13.6 Mexico 3.0 16.4 Iceland 2.9 7.8 Denmark 2.2 4.6 a) The 28 countries included in this table are ranked by decreasing ratio of social security contributions to GDP. Australia and New Zealand are not included in the table because they levy no social security contributions. b) The figures in the table match those in the Revenue Statistics. After the publication went to press in July 2002, the Swedish authorities provided updated information about their tax revenues for 2000 and 2001. The updated information implies that, in 2000 social security contributions were 15.0% of GDP and 28.1% of total tax revenues. 5