Income Taxes Creeping Upwards

October 11, 2013 International Tax Cooperation

Tax RatesLONDON – Personal income taxes are rising around the world, despite a small handful of countries which have opted to reduce taxes on individuals’ earnings this year.

The global average rate of personal income tax rose by 0.3 percent in 2013, with 9 countries having either raised the top rate of tax, or having introduced new taxes on incomes earned by wealthy taxpayers, according to the a new report released by KPMG International on October 9th.

Slovenia was found to have enacted the most significant hike to the rate of personal income tax in the world in 2013, raising the top marginal rate by 9 percent to a total of 50 percent.

India and the Czech Republic were noted as having introduced the most significant temporary taxes, with India applying a 10 percent tax on the incomes of all individuals earning more than INR 1 million, and the Czech Republic enacting a 7 percent tax on all personal incomes above CZK1 242 432.

Explaining why many governments have chosen to hike taxes on high incomes this year, the global Head of International Executive Services at KPMG René Philips said that applying higher taxes to wealthy taxpayers is “…a way for governments to gain revenue and be seen by taxpayers as doing something that is fair and necessary for the betterment of their country.”

Despite the overall increase to the rate of personal income taxes, some countries decreased tax burdens, with Latvia, Greece, and the UK all cutting their top marginal tax rates by 1 percent, 3 percent, and 5 percent respectively.

The findings in the report were broken down by wider geographic groups, showing that the average tax rate on personal incomes in Asia dropped from 28.29 percent to 28.24 percent in 2013.

The average rate in Latin America and North America rose from 31.84 to 32.21 percent, and from 28.53 to 29.77 percent, respectively.

The average rate of personal income in Africa also grew from 32 to 34.3 percent, and Europe saw a drop from 34.34 to 34.28 percent.

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