OECD nations’ tax take begins to recover

17 Dec 13

Government tax revenues increased across the majority of the developed nations last year as economies recover from the global financial crisis, the Organisation for Economic Cooperation and Development said today.

By Richard Johnstone | 17 December 2013

Analysing the revenues across the 30 member countries that have published data for 2012, the OECD found the average tax take represented 34.6% of gross domestic product in member countries. This was up from 34.1% in 2011, and 33.8% in 2010, according to the annual Revenue statistics publication.

Overall, the percentage of tax revenues to GDP rose in 21 of the 30 countries for which 2012 data is available, and fell in only 9 countries. The number of countries with increasing and decreasing ratios was similar to that seen in 2011, indicating a continuing trend toward higher revenues, the group concluded.

The trend for higher revenues was the result of many countries raising tax rates or broadening tax bases, the report found, while revenues from both personal and corporate income taxes were recovering following the crisis.

The largest annual increases relative to GDP in 2012 were seen in Hungary, Greece, Italy and New Zealand, while the largest falls were observed in Israel, Portugal and the UK.

However, compared with the 2007 pre-recession tax take, the ratio was down by more than 3 percentage points in four countries – Iceland, Israel, Spain and Sweden. The biggest fall has been in Israel, where tax revenues equating to 36.4% of GDP in 2007, had fallen to 31.6% in 2012.

The largest increase in percentage terms since the crisis has been in Turkey, where the tax take increased from 24.1% to 27.7% between 2007 and 2012. Four other countries – Belgium, France, Luxembourg and Mexico –reported increases of more than 1.5 percentage points over the same period.

Denmark has the highest tax-to-GDP ratio among OECD countries (48% in 2012), followed by Belgium and France (43.5%).

Mexico (19.6%) and Chile (20.8%) have the lowest percentage ratios among OECD countries, followed by the United States (24.3%) and South Korea (26.8%).