Data on government sector receipts, and on taxes in particular, are basic inputs to most structural economic descriptions and economic analyses, and they are increasingly used in economic comparisons. This annual publication gives a conceptual framework to define which government receipts should be regarded as taxes. It presents a unique set of detailed and internationally comparable tax data in a common format for all OECD countries from 1965 onwards. This year’s edition includes a special feature on the impact of COVID-19 on OECD tax revenues.
Revenue Statistics 2022
The Impact of COVID-19 on OECD Tax Revenues
Revenue Statistics
Abstract
Executive Summary
In 2021, the average OECD tax-to-GDP ratio rose by 0.6 percentage points (p.p.) to 34.1%, as countries recovered from the economic shock induced by the COVID-19 pandemic in 2020. Tax revenues increased by 12.8% in nominal terms on average across the OECD in 2021 according to preliminary data, while GDP rose by 10.5%. Although the OECD’s tax-to-GDP ratio also increased in 2020 (by 0.2 p.p.), this was in the context of widespread declines in tax revenues and GDP in nominal terms.
In this publication, taxes are defined as compulsory, unrequited payments to the general government or to a supranational authority. They are unrequited in that the benefits provided by governments to taxpayers are not normally allocated in proportion to their payments. Taxes are classified by their base: income, profits and capital gains; payroll; property; goods and services; and other taxes. Compulsory social security contributions paid to general government are also treated as taxes. Revenues are analysed by level of government: federal or central; state; local; and social security funds. Detailed information on the classifications applied is set out in the Interpretative Guide in Annex A.
Tax levels in 2021
Across OECD countries, tax-to-GDP ratios in 2021 ranged from 16.7% in Mexico to 46.9% in Denmark. Between 2020 and 2021, the OECD average tax-to-GDP ratio increased from 33.6% to 34.1%.
Tax-to-GDP ratios increased from the previous year in 24 of the 36 countries for which preliminary 2021 data is available, declined in 11 countries and remained unchanged in one.
The largest increase in 2021 was observed in Norway, whose tax-to-GDP ratio rose by 3.4 p.p. due to an increase in corporate income tax (CIT) caused by higher revenues from petroleum extraction following exceptional declines the previous year. The second-largest increase was in Chile (2.8 p.p.), while increases in excess of 2 p.p. were also observed in Israel and Korea.
Among the 11 countries where the tax-to-GDP ratio declined in 2021, the largest fall was seen in Hungary (2.1 p.p.). Canada, Iceland, Mexico and Türkiye also recorded a decline in their tax-to-GDP ratio of 1 p.p. or more. Decreases of less than one percentage point were observed in six countries.
Thirty-two OECD countries reported higher tax-to-GDP ratios in 2021 than in 2010, with the largest increases in the Slovak Republic, Korea and Spain (7.8 p.p., 7.5 p.p., and 7.1 p.p., respectively). Among the remaining six countries, tax levels in 2021 were more than 6 p.p. lower than in 2010 in Ireland and over 2 p.p. lower in Hungary.
Impact of COVID-19 on OECD tax revenues
A special feature in this publication looks at tax revenues during the second year of the COVID-19 pandemic, considering both the impact of the economic recovery and the evolution of tax policy on tax revenues in 2020 and 2021. It looks at changes in nominal taxes and nominal GDP, as well as changes in revenues from different tax types, to demonstrate which tax types contributed most to changes in the OECD average tax-to-GDP ratio in 2021.
Across the OECD, the priority for tax policy in 2021 was to support a recovery from the economic contraction observed in 2020. Measures introduced to support households and businesses in 2020 were withdrawn as economic activity picked up and the unemployment rate fell back to pre-pandemic levels in a majority of countries. Changes to labour taxation in 2021 were primarily intended to boost economic growth and promote equity, while CIT measures aimed to stimulate investment and innovation, especially in the green economy. In the area of value-added tax (VAT), e-invoicing and digital reporting requirements were widely adopted in 2021 as countries responded to the rapid growth of e-commerce during the pandemic. Towards the end of 2021, countries began to implement tax measures to shield households and firms from rising energy prices.
The special feature attributes the recovery in tax revenues across the OECD in 2021 to a rebound in revenues from CIT and VAT, which rose by 0.5 p.p. and 0.4 p.p. of GDP respectively in 2021. In 2020, CIT revenues recorded the largest decline of any major tax type, of 0.3 p.p., while VAT was unchanged as a share of GDP in the same year. Personal income tax (PIT) and social security contributions had underpinned the resilience of tax revenues in the OECD in 2020, both rising by 0.3 p.p.; in the second year of the pandemic, revenues from PIT remained unchanged as a share of GDP, while social security contributions declined by 0.2 p.p. Revenues from excises declined slightly in both years, while property taxes remained unchanged as a share of GDP in 2020 and 2021.
Tax structure in 2020
In 2020, the latest year in which final data is available for all OECD countries, social security contributions accounted for the largest share of tax revenues in the OECD, at just over one-quarter (26.6%), on average. Together with PIT (24.1%), these two tax types amounted to over half of tax revenues in OECD countries. VAT accounted for one-fifth of total revenues (20.2%), with other consumption taxes generating a further 11.9%. CIT accounted for 9.0% of total tax revenues in 2020, with property taxes (5.7%) and residual taxes accounting for the remainder.
Between 2019 and 2020, the average share of income taxes in total tax revenues declined by 0.2 p.p. to 33.7%, as declines in CIT offset increases in PIT. The average share of tax revenues from taxes on goods and services also decreased in 2020 (by 0.5 p.p.) while the share of social security contributions in the OECD average tax structure rose by 0.7 p.p.
Changes by level of government
On average, subnational governments received a higher share of tax revenues in 2020 than in 2019. The central government’s average share of revenues in 2020 fell from 52.9% to 51.9% of general government revenue in federal countries and from 63.2% to 62.4% in unitary countries. In federal countries, 25.7% of tax revenues were received at subnational level on average (ranging from 5.3% in Austria to 49.4% in Canada), with approximately two-thirds of revenues received by state governments and one-third by local governments. In unitary countries, the share of local government revenues was 11.1% on average, ranging from less than 0.8% in Estonia to 36.8% in Sweden.
