ACCORDING to a release from the Organisation for Economic Co-operation and Development (OECD), the average tax and social security burden on employment incomes has increased in 19 out of 34 countries,

New data shows that this tax burden increased by 0.1 of a percentage point to 35.6 per cent in 2012, in 19 out of 34 countries, but fell in 14, and remained unchanged in 1. The increases were largest in the Netherlands, Poland and the Slovak Republic (mainly due to increased rates and other changes to employer social security contribution) as well as Spain and Australia (due to higher statutory income tax rates).

Over the past two years, income tax burdens have risen in 23 out of 34 countries, largely because a higher proportion of earnings was subject to tax as the value of tax free allowances and tax credits fell relative to earnings. In 2012, only 6 countries had higher statutory income tax rates for workers on average earnings than in 2010.

The report provides details about the taxation of employment incomes and the associated costs to employers for different household types and at different earnings levels on an internationally comparable basis – key factors in whether individuals seek employment and businesses hire workers.

The tax burden is measured by the ‘tax wedge as a percentage of total labour costs’ – or the total taxes paid by employees and employers, minus family benefits received, divided by the total labour costs of the employer. Taxing Wages also breaks down the tax burden between personal income taxes, including tax credits, and employee and employer Social Security Contributions.