Global Tax Coffers Are Filling At A Faster Rate

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Taxpayers are filling government coffers with more cash than at any time since the recession, according to figures from the Organisation of Economic Co-Operation and Development (OECD).

The international organisation reports the average OECD government clawed 34.6% of GDP as taxes in 2012, compared to 33.8% in 2010 and 34.1% in 2011.

Thirty countries supplied information for the research, and tax revenue as a percentage of GDP increased in 21and dropped in just nine.

Taxpayers and companies in Hungary, Greece, Italy and New Zealand faced higher increases in the year, while those in Israel, Portugal and Britain saw a slight drop.

Highest and lowest tax takes

The OECD also listed a number of key findings, including:

  • The tax take in the United States, from 24.0% of GDP in 2011 to 24.3% in 2012, was lower than the OECD average.
  • Compared to 2007 pre-recession tax to GDP ratios, the ratio in 2012 was still 3% lower in Iceland, Israel, Spain and Sweden. The biggest fall was seen in Israel – from 36.4% in 2007 to 31.6% of GDP in 2012.
  • The tax burden in Turkey surged from 24.1% to 27.7% between 2007 and 2012. Belgium, France, Luxembourg and Mexico all reported increases of more than 1.5% in 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% in 2012) and Chile (20.8%) have the lowest tax-to-GDP ratios among OECD countries, followed by the United States at 24.3% and Korea at 26.8%.

“Personal and corporate tax revenues are rising following a steep drop during the recession,” said the OECD report.

FATCA network

“The current average is still below the pre-recession average tax to GDP ratio of 35.9%, although social security contributions have increased in many countries.

The OECD research explains that tax against GDP ratios change for a number of reasons:

Governments with progressive tax policies see tax revenue grow at a faster rate than income

Many countries have switched their tax bases so taxpayers keep more of their income but pay more on spending

Meanwhile, the OECD has also been at the forefront of fighting tax avoidance by the wealthy and large corporations.

The OECD designs tax treaties between nations and has played a major part in the development of the US Foreign Account Tax Compliance Act (FATCA) network around the world. Around 50 nations have signed or indicated that they will sign up to the agreement.

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