Tax Burden Falls In OECD Countries Acording To Latest Survey

by Jason Gorringe, Tax-News.com, London

24 October 2003

Tax revenues fell as a percentage of wealth amongst OECD countries for a second consecutive year according to the Organisation’s latest revenue statistics, due mainly to tax cutting policies and economic weakness.

According to the figures, tax burdens fell in 16 of the 27 members of the OECD where data was accessible. Most of these were concentrated in the European Union, where tax revenues accounted for 40.5% of GDP, down from a level of 41% in 2001, marking two straight years of declines after a five year period of increases.

Seven countries recorded a decline in their tax burden of more than 1%. These included the United Kingdom, Canada, Ireland, Hungary, Austria, Greece and Turkey. The decline can be partly explained by an emphasis on tax cutting policies in many countries. Since 2000, fifteen OECD members cut their top rates of income tax, whilst twelve lowered their rates of corporate tax. However, Luxembourg, New Zealand and Slovakia all recorded more than a 1% increase in their tax burdens.

The OECD points out that the recent economic slowdown is also responsible for the general drop, as reductions in national income reduce revenues accordingly.

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