AS governments
struggled to support faltering economies in one of the worst recessions
in history, average tax and social security burdens on employment
incomes fell in 24 out of 30 OECD countries last year. It is, however,
uncertain whether this trend will continue, due to pressure on public
budgets.
While
lower taxes on labour can help to boost economic recovery, this should
be part of a broader, balanced package, according to OECD secretary
general, Angel Gurría.
The
biggest falls were in New Zealand that already has a low rate of
taxation, followed by Turkey and Sweden that reported significant
reductions.
'Taxing
Wages', OECD's annual publication, calculates the difference between the
total cost to an employer of employing someone and that person's net
take-home pay, including any cash benefits from government welfare
programmes, to define what it calls the ‘tax wedge'. The tax burden at
any given level of earnings is derived by dividing this ‘tax wedge' by
the total payroll costs.
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