NCPA - National Center for Policy Analysis


October 18, 2007

The average tax burden in Organization for Economic Co-operation and Development (OECD) countries, measured as the ratio of tax to gross domestic product (GDP), is back up to the same levels as in 2000 after a brief reduction between 2001 and 2004, according to figures in the latest edition of the OECD's annual Revenue Statistics publication.

  • In 2006, tax burdens as a proportion of GDP rose in 14 of the 26 countries for which provisional figures are available, by comparison with 2005, and fell in 11, indicating that there is likely to have been little year-on-year change in the average tax burden for the 30 OECD countries.
  • The average tax burden in the 30 OECD countries reached 36.2 percent of GDP in 2005, the latest year for which complete figures are available, up from 35.5 percent in 2004 and level with the historical high of 36.2 percent recorded in 2000.

Three countries (Italy, Ireland and Korea) saw their tax burdens rise by more than one percentage point between 2005 and 2006, while another three (Luxembourg, New Zealand and the Slovak Republic) experienced reductions of more than one percentage point.

The latest figures showed a slight increase in the proportion of revenue collected through general consumption taxes, which take the form of value added taxes (VAT) throughout the OECD except in the United States and some Canadian provinces.  These averaged out at the equivalent of 6.9 percent of GDP in OECD countries in 2005, up from 6.8 percent in 2004 and 6.7 percent in 2000.

Over a 40 year time span, however, figures show no widespread shift in the tax burden from direct to indirect taxes, contrary to some public perceptions, because growth in VAT revenues has been mirrored by an even greater reduction in specific consumption taxes, mainly excise duties.

Source: "Revenue Statistics 1965-2006, 2007 Edition," Organization for Economic Co-operation and Development, October 17, 2007.

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