The recession is taking a toll on tax revenues in the developed world with the average tax burden in the 30 economies that are members of the OECD (Organisation for Economic Cooperation and Development), calculated as the ratio of tax revenues to GDP (gross domestic product), which was unchanged between 2006 and 2007, and then fell in 2008. The fall in the tax burden in 2008 is estimated to have been 0.6% of GDP, from 35.8% to 35.2%.
Tax burdens are also likely to have fallen further in 2009, the Paris-based think-tank for governments said.
The Irish ratio fell from 30.8% in 2007 to 28.3% in 2008; Spain's fell from 37.2% to 33% in 2008.
“Governments acted decisively in 2008 and 2009 to support demand during the crisis,”OECD Secretary-General Angel Gurría said.“But falling tax receipts underline the challenge they will face, once the recovery is secured, in maintaining sound public finances”
The OECD’s annual Revenue Statistics publication also reports:
- The US tax-to-GDP ratio dropped to 26.9% in 2008 from 28.3% in 2007.
- Denmark has the highest tax-to-GDP ratio among OECD countries in 2008 (48.3%), closely followed by Sweden (47.1%). These two countries together with Finland and New Zealand are the only OECD countries to see a fall in tax burdens in each of the last three years for which data are available.
- Mexico and Turkey have the lowest tax-to-GDP ratios among OECD countries. Mexico collected taxes equivalent to 21.1% of GDP in 2008, against 18.0% in 2007 and 18.3% in 2006. Turkey’s tax-to-GDP ratio was 23.5% in 2008 against 23.7% in 2007 and 24.5% in 2006.
- The largest increases in the tax to GDP ratio were in Mexico where it rose to 21.1% in 2008 from 18.0% in 2007, and in Luxembourg to 38.3% from 36.5%, reflecting higher oil revenues in Mexico and increased revenues from income taxes and taxes on goods and services in Luxembourg.
- Revenues from personal and corporate income taxes in OECD countries rose to 13.2% of GDP in 2007, from 13.0% in 2006 and 12.8% in 2005, exceeding the previous historical peak of 13.1% in 2000. Within this total, revenues from corporate income taxes accounted for an average of 3.9% of GDP in both 2006 and 2007, compared with 3.7% in 2005 and 3.6% in 2000. In 1975, these revenues comprised only 2.2% of GDP.
