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Tax Burden Close to Historic Peak in OECD Countries

by: Research Recap October 15, 2008    

Research Recap

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The OECD’s latest annual Revenue Statistics report shows that the average tax burden in the 30 OECD countries as a proportion of gross domestic product (GDP), is close to the historic peak of 36.1% reached in 2000. In 2006, the latest year for which complete figures are available, the tax-to-GDP ratio was 35.9%, up from 35.8% in 2005 and compared with 29.4% in 1975.

The latest figures show a continued rise in revenues from corporate income taxes to an average 3.9% of GDP in 2006, compared with 3.7% in 2005 and only 2.2% of GDP in 1975.

Whether this trend will continue in 2008 is uncertain, however. “The current economic slowdown is going to put additional pressure on government budgets,” OECD Secretary-General Angel Gurría observed. Britain and the U.S. are already downgrading forecasts of how much revenue they can expect from the financial sector, and other countries are also likely to see a reduction in revenues from corporate income taxes.

Since 1965, the contribution to total government revenues of corporate income taxes increased from 9% to 11% and that of social security charges has jumped from 18% to 25%. The share of personal income taxes, by contrast, has fallen back to below 1965 levels after rising in the 1970s and 1980s.

In the US, the tax burden inched up to 28.3% of GDP in 2007, from 28.0% in 2006. It was still below the peak of 29.9% reached in 2000, and compares with 25.6% in 1975. Revenues from corporate taxes rose to 3.3% of GDP in 2006 from 3.0% in 2005 and 2.9% in 1975.

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This article has 1 comment:

  •  
    Oct 15 03:19 PM
    I assume this is federal and that state and local is additional?
    Reply
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