On 6 December 2021 the OECD released Revenue Statistics 2021, containing a detailed summary of internationally comparable tax data for the OECD countries.

The statistics present the data for the year 2020, a year affected by the pandemic. The average OECD tax-to-GDP ratio increased in that year by 0.1 percentage points, reaching 33.5%. There was a fall in nominal tax revenues in most OECD countries due to the pandemic and the measures taken to support taxpayers, but the decrease in GDP was generally larger, leading to a small increase in the average tax-to-GDP ratio.

The tax-to-GDP ratios in OECD countries for 2020 ranged from 17.9% in Mexico to 46.5% in Denmark. There was an increase in tax-to-GDP ratios from 2019 to 2020 in 20 of the 36 countries for which the preliminary 2020 data was available for the report. The largest increase in the tax-to-GDP ratio was in Spain (1.9 percentage points), mainly as a result of an increase in revenues from social security contributions (SSCs) as a share of GDP. This reflects the fact that the nominal revenues from SSCs decreased by less than nominal GDP.

The largest decrease in tax-to-GDP ratio was in Ireland where the ratio fell by 1.7 percentage points. This fall resulted from decreased VAT revenues following the temporary reduction in VAT rates in 2020 and the decreased economic activity during the pandemic. There were also smaller falls in personal income taxes, SSCs, property taxes and excises collected in Ireland.

Impact of the pandemic on tax revenue

The latest issue of Revenue Statistics includes a special feature on the initial impact of the pandemic crisis on tax revenues in OECD countries, looking at the impact of the economic crisis and of the tax policy changes implemented to support businesses and households during the pandemic.

The effect of the tax policy measures taken during the crisis led to reduced revenues, as tax payments were deferred or tax liabilities were reduced. The fall in tax revenues was also due to generous tax credits and allowances combined with temporary or permanent reductions in tax rates.

In addition to this the fall in economic activity resulting from lockdowns and other restrictions reduced labour force participation, led to falls in household consumption and in business profits, and therefore further decreased tax revenues. The effect was alleviated to some extend by government support measures to reduce job losses and business insolvencies. The nominal falls in tax revenues were therefore smaller than those experienced in the financial crisis of 2008/2009.

The crisis had a greater effect on direct taxes on income than on indirect tax or property taxes. In 2020 there was an increase in tax revenue from personal income taxes (PIT) and SSCs on average across the OECD; but corporate income taxes (CIT) decreased, although to a smaller extent than in the global financial crisis. Revenue from excise taxes generally decreased, an example being the falls in fuel duty due to the decreased activity during the pandemic.