Tax Burden Dropped in OECD

November 25, 2009 Taxation in AustraliaTaxation in EUTaxation in IcelandTaxation in NetherlandsTaxation in SweedenTaxation in UKTaxation in USA  No comments

The tax burden, calculated as a ratio of tax receipts to Gross Domestic Product (GDP), faced by member countries of the Organization for Economic Cooperation and Development (OECD) fell by 0.5% in 2008.

According to the OECD’s “Revenue Statistics: 2009 Edition” report, published November 24th, the tax burden by its members has fallen as the worldwide financial crisis tolls global economies. The aggregate tax receipt-to-GDP ratio across the surveyed OECD nations in both 2007 and 2006 was 35.8%. Based on current provisional figures, this ratio has now fallen to an approximate 35.2% or 35.3%.

Mexico displayed the lowest tax burden with 21.1%, followed by Turkey and Korea at 23.5% and 26.6%, respectively. Denmark was ranked as the highest tax receipt to GDP ratio nation at 48.3%, Sweden and Belgium ranked second and third with 47.1% and 44.3%. The United Kingdom reported a figure of 35.7%, and the US is facing 26.9%. Based on the 2008 provisional figures, Iceland experienced the biggest year to year drop of 4.8%, and Mexico saw the highest rise with 3.1%. Australia, Japan, Netherlands and Poland did not provide provisional 2008 figures in time for the publication.

According to an OECD publication accompanying the “Revenue Statistics: 2009 Edition” report, the tax receipts of a nation typically fall proportionately more than GDP in times of recession. The current climate of government tax cuts aimed at boosting economic growth, only serves to accentuate this tax receipt-to-GDP fall.

Commenting on the findings Angel Gurría, OECD Secretary-General, said “Governments acted decisively in 2008 and 2009 to support demand during the crisis … but falling tax receipts underline the challenge they will face, once the recovery is secured, in maintaining sound public finances”.

The OECD has made available the “Revenue Statistics: 2009 Edition” report and the accompanying tax burden publication.

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