This chapter is based on the OECD Global Revenue Statistics Database and its accompanying publications. It describes the latest tax revenue trends, analysing both total tax-to GDP ratios and tax structures over time, across low-, middle-, and high-income countries, focusing on OECD countries in particular.
Tax Policy Reforms 2024
OECD and Selected Partner Economies
Tax Policy Reforms
Abstract
This chapter outlines the most recent trends in tax revenues, examining both the overall tax-to-GDP ratios and the composition of tax revenues across all 38 OECD countries, as well as low-, middle-, and high-income countries featured in the OECD Global Revenue Statistics database. It focuses on changes in tax-to-GDP ratios and tax structures principally in OECD countries, as well as for high-, middle-, and low-income country averages, with a particular emphasis on shifts observed over the past two to three decades. For 36 OECD countries, preliminary data for 2022 is presented in this chapter, for all other jurisdictions, regions, or income groups, the most recent available data is for 2021.
In 2022, the tax-to-GDP ratio decreased in most OECD countries, with the average ratio across the OECD dropping by 0.15 percentage points to 34.0%. Over three-quarters of OECD countries experienced an increase in corporate income tax (CIT) revenues as a percentage of GDP, driven by heightened profits, particularly in the energy and agriculture sectors. Conversely, excise revenues fell in 34 of the 36 OECD countries with available preliminary data for 2022, as significant rises in global energy prices reduced demand and led numerous countries to cut energy taxes (which was discussed in the previous edition of this report). Meanwhile value added taxe (VAT) revenues as a share of GDP fell in 16 of the 36 OECD countries with available preliminary data for 2022.
For non-OECD countries, the most up-to-date data available is from 2021 showing diverse fiscal responses and economic recoveries post-pandemic across different global regions. The tax-to-GDP ratio for Africa, covering 33 countries, remained constant at 15.6% of GDP from 2020 to 2021. In contrast, the LAC region, with 26 countries covered, saw an increase of 0.8 percentage points to 21.7%, and the Asia-Pacific region, comprising 29 economies, experienced a modest rise of 0.2 percentage points to 19.8%. Analysing by income group, the average tax-to-GDP ratio in high-income countries (HICs) rose by 0.1 percentage points to 31.8% in 2021, by 0.3 percentage points to 18.4% in middle-income countries (MICs) and remained unchanged at 13% in low-income countries (LICs).
The tax mix across income groups remained largely unchanged in 2021 relative to 2020 (OECD, 2023[1]). The overall mix of tax revenue sources across OECD countries remained aligned with tax mixes observed over the past ten years. The rise in tax-to-GDP ratios in 2021 was primarily attributed to increased revenues from CIT and VAT across various jurisdictions. Additionally, a slight decline in revenues from social security contributions (SSCs) and excise taxes was noted in most jurisdictions. The same is true across income group averages, with small or no changes in the tax mix in 2021 relative to 2020. While the tax mix in HICs, on average, relies more heavily on personal income tax (PIT) revenues than in MICs and LICs, the latter, on average, raise over half of their tax revenues from taxes on goods and services which is substantially more than in HICs.
Tax revenues vary significantly across countries. However, there is a trend of convergence in tax-to-GDP ratios, with LICs and MICs increasing their tax revenues over the last thirty years (Figure 2.1). Variation in tax-to-GDP ratios among OECD countries also continued to gradually diminish, with countries having ratios near the lower end moving closer to the OECD average.
In 2021, regions around the world, including Latin America and the Caribbean (LAC), Asia-Pacific, and Africa, saw their tax revenues start to rebound from the significant contractions of 2020 caused by the COVID-19 pandemic. The average change of tax revenues, however, hides the substantial variation across countries. From 2020 to 2021, the tax-to-GDP ratio rose in 85 economies with available data for 2021, fell in 38, and stayed the same in one. In more than half of these economies, the change in the tax-to-GDP ratio was under one percentage point, whereas 22 economies saw shifts greater than two percentage points in their tax-to-GDP ratio.
In 35 of the 36 OECD countries with available data in 2022, nominal tax revenues increased compared to the previous year, with nominal GDP rising in all 36 countries. In 20 of these countries, the tax-to-GDP ratio decreased because tax revenues grew at a slower pace than GDP, whereas in Denmark, the ratio fell due to a nominal decrease in tax revenues alongside a GDP increase (OECD, 2023[1]). Conversely, in the 14 countries that experienced an increase in their tax-to-GDP ratio compared to 2021, nominal tax revenues grew more significantly than nominal GDP.
Tax revenues as a percentage of GDP
Note: The maximum and minimum OECD values signal the range. The number of jurisdictions included in each group varies over time – see the Global Revenues Statistics database for more information.
Source: Global Revenue Statistics Database
As with the level of tax revenues, the composition of tax structures across OECD countries showed significant variation in 2021. 18 OECD countries primarily generated their revenues from income taxes (including both corporate and personal taxes), ten OECD countries relied most heavily on social security contributions, and another ten derived the majority of their revenues from consumption taxes (including VAT). Taxes on property and payroll taxes contributed less significantly to the overall tax revenue mix in OECD countries during 2021, both on average and within the majority of the countries (Figure 2.2). Low-income countries (LICs) and middle-income countries (MICs) typically fall into the latter group, with taxes on goods and services constituting the largest portion of total tax revenues. Within the realm of taxes on goods and services, excise taxes represent a more substantial share of revenues in LICs and MICs compared to high-income countries (HICs), highlighting the variability in tax revenue sources based on income levels.
Note: Countries are grouped and ranked by those where income tax revenues (personal and corporate) form the highest share of total tax revenues, followed by those where social security contributions, or taxes on goods and services, form the highest share.
Source: Global Revenue Statistics Database.
Between 2021 and 2022, tax structures within OECD countries did not change significantly. The shifts in tax-to-GDP ratios across various countries displayed a relatively balanced mix of increases and decreases in 2022, with a slight tilt towards more decreases. Among the 21 countries experiencing a decline in their tax-to-GDP ratio, Denmark saw the most significant drop of 5.5 percentage points, largely attributed to a decrease in income tax1 revenues (Figure 2.3). Additionally, the Netherlands, Poland, Sweden, Switzerland, and Türkiye each reported reductions in their tax-to-GDP ratio exceeding 1 percentage point. Conversely, Korea experienced the most substantial growth in its tax-to-GDP ratio, with an increase of 2.2 percentage points, driven by elevated income taxes and VAT revenues. Norway followed with the second-largest rise, with tax revenues increasing by 1.9 percentage points due to extraordinary profits in the energy sector2. Notably, increases exceeding 1.5 percentage points were also recorded in Chile and Greece.
Year-on-year change, p.p.
Note: Data for 2022 are preliminary and should be interpreted with caution. This graph includes the change between years 2020 and 2021 for Australia and New Zealand, Japan, Greece, and the OECD average due to the unavailability of disaggregated data for 2022 for these countries.
Source: OECD Revenue Statistics (2023).
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References
[1] OECD (2023), Revenue Statistics 2023: Tax Revenue Buoyancy in OECD Countries, OECD Publishing, Paris, https://doi.org/10.1787/9d0453d5-en.
← 1. Including PIT, CIT, and the pension yield tax.
← 2. The increase in corporate income tax revenues in 2022 is due to exceptional profits in the energy industry in 2022 during the energy crisis. Similar to petroleum companies, producers of hydroelectric power are subject to a special income tax for the state to collect the resource rent.