Tax

Taxman Took A Bigger Bite Of GDP Across OECD Member States Last Year

Tom Burroughes Group Editor London 24 October 2012

Taxman Took A Bigger Bite Of GDP Across OECD Member States Last Year

Rising tax rates and some improvement in economic conditions since 2008 have boosted public revenues as a share of the overall economic pie among members of the Organisation of Economic Co-Operation and Development, the Paris-based group said today.

OECD countries collected about 34.0 per cent of gross domestic product in taxes in 2011, compared with 33.8 per cent in the year before. This is still well below the most recent peak of 2007 when tax revenues to GDP ratios averaged 35.1 per cent.

The data puts some of the recent debate about tax evasion and avoidance into a broader context, highlighting how the total tax “take” of countries can vary due to shifts in economic growth rates, as well as through changes to tax policy.

The data showed that of the 29 countries for which 2011 data are available, tax revenues rose as a proportion of GDP in 20 states and fell in only six of them.

Chile, France, the Czech Republic and Germany saw the largest increases in 2011, and Hungary, Estonia and Sweden the largest falls.

“Increasing tax ratios in 2010 and 2011 are due to a combination of factors.  With a progressive tax regime, economic recovery led to tax revenues rising faster than GDP and at the same time many countries raised tax rates and/or broadened bases.  In 2008 and 2009, the declining ratios reflected the severity of the recession and that some countries responded by cutting tax rates,” the OECD said.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes