TaxCorporate TaxOECD study shows slowing in indirect taxes

OECD study shows slowing in indirect taxes

It still remains to be seen whether indirect taxes are the likely way forward, according to the latest OECD study

The latest study by the
Organisation
for Economic Co-operation and Development
(OECD) shows the average tax
burden in OECD countries, measured as the ratio of tax to gross domestic product
(GDP), is back up to the same levels as in 2000 after a brief reduction between
2001 and 2004. But over a 40-year time span, there was no widespread shift in
the tax burden from direct to indirect taxes, contrary to some public
perceptions, because growth in VAT revenues has been offset by a reduction in
specific consumption taxes, mainly excise duties.

UK had the 16th greatest share of indirect tax among the OECD countries,
behind the Netherlands, Finland and Czech Republic, indirect tax accounting for
about 30% of revenue and VAT just less than 20%. The highest share of indirect
tax was in Mexico, at close to 60%, and the lowest share was in the US, which
only has retail sales tax, at less than 20%.

Between 1965 and 2006, as VAT spread from three to 29 of the 30 OECD
countries, the revenue share of VAT and sales taxes in all OECD countries rose
from 13.6% to 18.9%, while total revenue from all taxes on consumption fell from
38.4% to 31.9% because of the drop in revenues from excise duties and other
specific taxes.

The sharpest rise in the 40-year period was in social security contributions
– up from 17.6% to more than one-quarter of total revenue from taxes; followed
by corporate income tax – up from 8.8%, to 10.3%. All other taxes accounted for
a falling share of total tax revenue – personal tax, down from 26.2% to 24.6%;
followed by property tax, down from 7.9% to 5.6% and payroll tax, down from 1%,
to 0.8%.

Further reading:

A code of taxation is vital for accountants

Related Articles

Watch out when winding up

Corporate Tax Watch out when winding up

1m Emma Rawson, ATT Technical Officer
How might Brexit affect UK tax policy?

Brexit & Economy How might Brexit affect UK tax policy?

1m Santhie Goundar
Corporation tax losses – your newly flexible friends

Corporate Tax Corporation tax losses – your newly flexible friends

3m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

4m Emma Smith, Managing Editor
SMEs paying higher rate of corporation tax than big businesses

Corporate Tax SMEs paying higher rate of corporation tax than big businesses

4m Alia Shoaib, Reporter
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

7m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

7m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

8m Alia Shoaib, Reporter