AS per OECD's annual revenue report, corporate
tax revenues
have been falling across OECD countries since the global economic crisis,
putting greater pressure on individual taxpayers to ensure that governments
meet financing requirements.
Average revenues from corporate incomes and gains fell from 3.6% to 2.8%
of gross domestic product (GDP) over the 2007-14 period. Revenues from individual
income tax grew from 8.8% to 8.9% and VAT revenues grew from 6.5% to 6.8%
over the same period.
"Corporate taxpayers continue finding ways to pay less, while individuals
end up footing the bill," said Pascal Saint-Amans, director of the OECD Centre
for Tax Policy and Administration. "The great majority of all tax rises seen
since the crisis have fallen on individuals through higher social security
contributions, value added taxes and income taxes. This underlines the urgency
of efforts to ensure that corporations pay their fair share."
These efforts are focused on the OECD/G20 Base Erosion and Profit Shifting
(BEPS) Project, which provides governments with solutions for closing the
gaps in existing international rules that allow corporate profits to « disappear
» or be artificially shifted to low/no tax environments, where little or
no economic activity takes place.
Revenue Statistics shows that the average tax burden across OECD countries
increased to 34.4% of GDP in 2014. The increase of 0.2 percentage points
in 2014 continues the recent upward trend, as the OECD average tax burden
has increased in every year since 2009 when the ratio was 32.7%. The tax
burden is measured by taking the total tax revenues received as a percentage
of GDP.
While the increase in tax ratios between 2009 and 2014 is due to a combination
of factors, the largest contributors have been increases in revenue from
VAT and taxes on personal incomes and profits, which combine to account for
around two-thirds of the increase. Revenues from social security contributions
and property taxes account for the majority of the remainder.
Discretionary tax changes have played an important role, as many countries
have raised tax rates or broadened tax bases or both. The OECD average standard
VAT rate has increased to a record high, rising from 17.7% in 2008 to 19.2%
in 2015. Twenty-two of 34 OECD countries raised top personal income tax rates
between 2008 and 2014.
The average OECD tax-to-GDP ratio in 2014 was 0.3 percentage points higher
than the pre-crisis level of 34.1% in 2007, and has surpassed the previous
high of 34.2%, which was recorded in 2000. The average revenues from corporate
incomes and gains fell from 3.6% to 2.8% of GDP over the same period. This
decline was offset by an increase in social security contributions, from
8.5% to 9.2% of GDP, and a smaller increase in revenues from VAT.
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