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OECD Releases 2020 Tax Trends Report

by Ulrika Lomas, Tax-News.com, Brussels

10 December 2020


Tax revenues fell across the OECD for the first time in a decade during 2019, but a much larger decrease is expected in 2020 as a result of the COVID-19 pandemic, according to the OECD's newly released annual Revenue Statistics report.

The 2020 edition of the OECD report shows that the average tax-to-GDP ratio has fallen to 33.8 percent in 2019, a decrease of 0.1 percentage points since 2018. This was due to decreases in 15 OECD countries that were larger, on average, than the increases in the 20 remaining countries for which 2019 data were available.

"Since the global financial crisis of 2008, we have seen a consistent trend of increasing tax revenues in the OECD, which have decreased slightly in 2019 for the first time," said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration. "We expect to see much sharper decreases next year when the impact of COVID-19 starts to become more apparent. At some point, when the health crisis has passed and the economic recovery is underway, governments will need to reconsider whether their tax systems are up to the challenges of the post-pandemic environment."

Revenue Statistics confirms the longstanding diversity in tax-to-GDP ratios among OECD countries, which remained the case in 2019, ranging from 16.5 percent in Mexico to 46.3 percent in Denmark.

The largest fall was seen in Hungary (1.7 percentage point (pp)), partially due to a decrease in corporate income taxes following the removal of the compulsory tax advance supplement on business taxes. Other large decreases were seen in Iceland (1.1 pp), Belgium, and Sweden (both 1.0 pp). Only one increase of over one percentage point was seen, in Denmark (2.0 pp), which overtook France as the country with the highest tax-to-GDP ratio.

The data show that corporate income taxes in the OECD have continued to increase, from 9.2 percent of total tax revenues on average in 2014 to 10.0 percent in 2018. However, this is still lower than the peak recorded share of corporate income taxes at 11.5 percent of total tax revenues in 2007.

In 2018, average revenues from taxes on goods and services declined in OECD countries. Although revenues from VAT remained steady at 20.4 percent of total tax revenues, excise tax revenues fell by 0.4 percentage points to 7.2 percent.

TAGS: environment | tax | business | Belgium | Denmark | Hungary | Iceland | Mexico | France | Sweden | services | Other | Tax

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