| Image credits: Image by Stefan Schweihofer

A new report from the OECD, Revenue Statistics 2024, highlights that the average tax-to-GDP ratio among OECD countries remained largely stable in 2023. Governments balanced cost-of-living relief efforts with increasing spending pressures from climate change and aging populations, shaping the global tax landscape.

STABLE TAX REVENUES WITH SLIGHT VARIATIONS

In 2023, the average tax-to-GDP ratio for OECD countries was 33.9%, a minor decline of 0.1 percentage points (p.p.) from 2021 and 2022 but still higher than the pre-pandemic level of 33.4% in 2019.

Key findings include:

Tax-to-GDP Changes:

• Increased in 18 of 36 OECD countries with available data.

• Declined in 17 countries.

• Remained unchanged in one country.

Largest Increases:

• Luxembourg, Colombia, and Türkiye (≥ 2.5 p.p.).

Largest Declines:

• Israel, Korea, and Chile (≥ 3.0 p.p.).

Range of Ratios:

• Lowest: 17.7% in Mexico.

• Highest: 43.8% in France.

The difference between the highest and lowest tax-to-GDP ratios narrowed to 26.1 p.p., the smallest gap since 2000. Since 2019, this difference has shrunk by 5.2 p.p., reflecting a trend toward convergence.

FOCUS ON HEALTH TAXES

The report includes a special chapter on health taxes, highlighting their dual role in generating revenue and improving health outcomes by discouraging consumption of harmful products like alcohol, tobacco, and sugar-sweetened beverages.

Revenue from Health Taxes (2022):

• 0.7% of GDP on average.

• Represented 2.2% of total tax revenues.

Decline Over Time:

• Revenues from excise taxes on alcohol, tobacco, and sugary drinks fell as a proportion of GDP from 2000 to 2022, with the steepest decline in alcohol-related excise revenues.

CONSUMPTION TAX TRENDS AND VAT REFORMS

A companion report, Consumption Tax Trends 2024, sheds light on the growing role of VAT (Value-Added Tax) revenues and ongoing reforms to improve compliance and adapt to the digital economy.

VAT Revenue Growth:

• Averaged 20.8% of total tax revenue across OECD countries in 2022, up 0.1 p.p. from 2021.

Digital Economy Adaptation:

• 27 OECD countries adopted measures to collect VAT on imported goods sold online.

• Almost all OECD countries with VAT now ensure collection on online services like apps and streaming platforms.

Digital Reporting Requirements:

• Most OECD countries require electronic submission of detailed transaction data, either in real time or periodically, to enhance compliance.

• Implementation varies in scope and detail across countries.

The OECD’s latest findings underscore the evolving nature of tax policies and their adaptation to economic challenges and technological advancements. From stable tax-to-GDP ratios to innovative VAT measures, these insights highlight the delicate balance governments must maintain in addressing fiscal needs and societal priorities.

SOURCES/RECOMMENDED READ: 

• Revenue Statistics 2024 | OECD

• Consumption Tax Trends 2024 | OECD